Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

MESSAGE FROM THE QUEEN

TOWN AND COUNTRY PLANNING

The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:

I have received your Address praying that the Location of Offices Bureau Order 1963 be made in the form of the draft laid before your House.

I will comply with your request.

PRIVATE BUSINESS

MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (BOLTON) BILL

Read the Third time and passed.

Oral Answers to Questions — MINISTRY OF DEFENCE

N.A.T.O. Forces (Sergeant Missile)

Mr. Frank Allaun: asked the Minister of Defence what plans have been made for the deployment of the Sergeant missile by the North Atlantic Treaty Organisation forces.

The Minister of Defence (Mr. Peter Thorneycroft): This information is confidential to N.A.T.O.

Mr. Allaun: As Germany is now buying these missiles from America and has had technicians training there, will the Minister tell the House to what extent German troops are in control of these missile sites in Europe?

Mr. Thorneycroft: That is quite a different question. The Question asked for the deployment of these missiles, which is a confidential matter.

Land, Petersfield

Miss Quennell: asked the Minister of Defence the total acreage of land retained by all three Services in the constituency of Petersfield.

Mr. Thorneycroft: A total of 7,293 acres.

Miss Quennell: Does my right hon. Friend keep his extensive estates under review?

Mr. Thorneycroft: If my hon. Friend would like to see me about the details, I should be happy to meet her.

Malta (Polaris Submarine Base)

Mr. Brockway: asked the Minister of Defence what discussions have taken place with the Government of the United States of America regarding the establishment of a Polaris submarine base in the waters of Malta; and what information has been given to the Government of Malta on this matter.

Mr. Thorneycroft: None, Sir.

Mr. Brockway: While welcoming that reply, may I ask the right hon. Gentleman whether he has seen the statement from Washington this week that American Polaris submarines are to be stationed in the Mediterranean? Will he give us an assurance that they will not be anchored at Malta without the consent of its Government and Parliament?

Mr. Speaker: That supplementary question is out of order, because the Minister is not responsible for that statement.

Services (Reorganisation)

Mr. Wingfield Digby: asked the Minister of Defence whether, under his scheme for a reorganisation of the Services, each of the three chiefs of staff is to retain the right of direct access to the Cabinet.

Mr. Thorneycroft: The position of the chiefs of staff in fulfilling their traditional duty as professional military advisers to the Government is defined in paragraphs 5 and 17 of the 1958 White Paper on Central Defence Organisation (Cmd. 476). As was made clear in recent defence debates no change is contemplated in this respect.

Mr. Healey: Is the Minister of Defence aware that many hon. Members on both sides of the House feel that this reorganisation will seriously weaken the effective political control of the three Services if the individual Service Ministers are downgraded in their status while the heads of the Services retain the right of access to the Cabinet even without consulting the Minister of Defence?

Mr. Thorneycroft: Clearly, any effective reorganisation of the central organisation of defence was bound to have a marked effect on the political control of the three Services.

Mr. Healey: It weakens it.

Mr. Wingfield Digby: asked the Minister of Defence whether, under his scheme for a reorganisation of the Services, it is now proposed to abolish the Board of Admiralty, the Army Council and the Air Force Council.

Commander Kerans: asked the Minister of Defence what consideration he is giving to the co-ordination of the intelligence departments of the Admiralty, War Office and Air Ministry in the new defence structure, in order to ensure reductions in present staffs.

Mr. Dempsey: asked the Minister of Defence what estimates he has now made of the reduction in manpower and the financial savings that will result from the proposed reorganisation of the defence departments.

Mr. Thorneycroft: As I have told the House, the details of the reorganisation are being worked out and I hope to place them before the House later in the summer. The proposals then will cover the various matters raised in these Questions, but I should prefer not to make any statement on them in the meantime.

Mr. Digby: Before deciding on a system of complete uniformity will my right hon. Friend bear in mind the advantages of the Board system as it has worked in the Admiralty, which differs considerably from that of the Army Council system in the War Office? Before deciding on uniformity, will he hesitate to destroy a system that has worked very well throughout the years?

Mr. Thorneycroft: I am well aware of the distinctive features of the

Admiralty, and I will bear these and all other relevant considerations in mind.

Mr. Dempsey: Would not the Minister of Defence agree that by employing the techniques of applied accountancy he should be able to give the House a general idea as to what savings in finance and manpower could be accumulated until such time as he makes his precise statement?

Mr. Thorneycroft: There will be ample opportunities for discussing that at a time when we can see the whole picture.

Mr. Paget: Is it not really pretty scandalous to come forward with schemes of this sort without having thought out such elementary considerations as this or without having really considered whether the Services are to be controlled by the political Ministers or by irresponsible chiefs of staff, as apparently is now considered?

Mr. Thorneycroft: If the hon. and learned Gentleman considers the matter, I think that he will realise that all these matters would require very careful and detailed discussion with large numbers of people, which would certainly become public, and that therefore there is some advantage in announcing decisions in principle in advance of the discussions.

Mr. Shinwell: As the right hon. Gentleman has not yet made up his mind, would he object if some hon. Members helped him to make up his mind on this very important matter of the reorganisation of defence? Does he realise that, if he retains the Board of Admiralty, the Army Council and the Air Force Council in their present form, the reorganisation of defence will be just a façade?

Mr. Thorneycroft: I would not object in the slightest. Indeed, the advice and counsel of this House are of inestimable value in a reorganisation of this character.

Services, Malta (Run-down)

Mr. Wall: asked the Minister of Defence whether he will consider recasting the planned services run-down in Malta.

Mr. Thorneycroft: In working out the plans for the run-down in Malta as in


other places we have to consider primarily the needs of the Services. Within the framework dictated by Service requirements we have naturally done all we can to create the least possible hardship locally.

Mr. Wall: As my right hon. Friend knows, the Governor recently made a speech saying that, in spite of increased industrialisation, by 1967 one-quarter of the population might be out of work and one-fifth of the national revenue fallen away. Will not my right hon. Friend consider phasing the run-down over ten years instead of five?

Mr. Thorneycroft: The Services have much to be grateful for to Malta, and if there should be changes in our deployment which would have the effect of assisting the Maltese economy I should welcome them.

Mr. Awbery: Is the right hon. Gentleman aware of the serious position which will arise as a result of the run-down of the three Services in Malta? Will he consult the other Ministers with a view to finding alternative employment for the men who will become redundant as the run-down of the Services takes place?

Mr. Thorneycroft: I am in close consultation with my right hon. Friend, though I think that the latter question is not for me.

N.A.T.O. (V-bomber Force)

Mr. Healey: asked the Minister of Defence which authority in the North Atlantic Treaty Organisation will command the British V-bombers assigned by Her Majesty's Government to the North Atlantic Treaty Organisation.

Mr. Thorneycroft: The command and other arrangements for the nuclear force of which these aircraft will form part are matters for N.A.T.O. as a whole and are still under discussion.

Mr. Healey: Can the Minister of Defence confirm that until this date no purely N.A.T.O. authority has had any strategic nuclear weapons at its command? Does he not agree that the use in certain ways of the V-bomber force could automatically involve the whole world in total global thermo-nuclear war? Is it not, therefore, a very extraordinary thing that Her Majesty's Government

should have decided to assign these bombers to N.A.T.O. without first finding out what authority in N.A.T.O. is going to control the use of these bombers?

Mr. Thorneycroft: We should be agreeable to these being put under the command of SACEUR, but it is right and proper that I should defer any announcement about details of command and control until N.A.T.O., which is, after all, an alliance, has had an opportunity of considering these matters.

Mr. Kershaw: Is it not a fact that N.A.T.O. has had tactical nuclear weapons under its command for some time? Is it not also a fact that the impact on the ground of tactical nuclear weapons is not so very different from the strategic weapons which are now being referred to?

Mr. Thorneycroft: My lion. Friend is, of course, quite right. The injudicious use of nuclear weapons of any kind could involve the world in total destruction.

TSR2 Aircraft

Mr. Cronin: asked the Minister of Defence what part the TSR2 aircraft is intended to play as part of the British or North Atlantic Treaty Organisation strategic nuclear deterrent.

Mr. Thorneycroft: The TSR2 is capable of both a conventional and a nuclear role. The question of whether it is strategic must depend upon the nature of the target attacked. Some of the aircraft will no doubt be offered for assignment to N.A.T.O. on suitable terms.

Mr. Cronin: Could the Minister of Defence state definitely whether this aircraft could reach the capital of a potential aggressor without refuelling and return? Could he do this for two reasons—first, to increase the deterrent effect of the aircraft, and, secondly, to reassure the public as to the authenticity of the Government's very recent claim that this is indeed a strategic nuclear bomber?

Mr. Thorneycroft: The aircraft could clearly be used in a strategic role, but I would say nothing which would give an indication of its precise range.

N.A.T.O. (Multilateral Force)

Mr. Wall: asked the Minister of Defence what conclusions he has reached as a result of his examination of the proposed North Atlantic Treaty Organisation multilateral Polaris surface force regarding its military advantages; what degree of British participation is now planned; how it is proposed that the force will be controlled; and under what legal authority it is proposed that discipline will be enforced.

Mr. Thorneycroft: I refer my hon. Friend to my replies, and that of the Civil Lord of the Admiralty, of 27th March.

Mr. Wall: Does not my right hon. Friend agree that, while there may be political advantages in this idea, there must be very few military advantages in having ships crewed by men of different nations? Would he not agree that this might be a very expensive form of deterrent?

Mr. Thorneycroft: I will bear in mind these and all other considerations which have been put in question and answer and debates on these subjects.

Mr. Cronin: asked the Minister of Defence if he will now give details of the proposed composition of the crews of the vessels of the North Atlantic Treaty Organisation multilateral force now under consideration.

Mr. Thorneycroft: British ships will be manned by British crews. The proposal for a mixed-manned component is being studied in N.A.T.O. and no decision on it has yet been taken.

Mr. Cronin: Will the Minister indicate whether the authenticating officers who fire the missiles will be of mixed nationalities and, in that context, will he bear in mind the undesirable consequences of any German fingers being on the buttons which fire the missiles?

Mr. Thorneycroft: All these matters will be borne in mind in the consideration which N.A.T.O. is giving to this topic.

Mr. P. Williams: Will my right hon. Friend give an undertaking that he will keep his mind open on this matter of

multi-racial crews, providing one thing—that at the end of the day he rejects the idea?

Mr. Thorneycroft: I think that it is better to consider things before one either accepts or rejects them.

Tactical Nuclear Weapons

Mr. Harold Davies: asked the Minister of Defence if he will define a tactical nuclear weapon.

Mr. Thorneycroft: One that is directed at a tactical target.

Mr. Davies: Is the right hon. Gentleman aware that when General Sir Richard Gale was acting as chairman of a series of responsible lectures on strategic concepts he himself said that, when he was deputy allied leader in Europe, he tried to get a definition of a tactical nuclear weapon and—
Neither from my own country, nor from the United States of America, did I get any

Hon. Members: Reading.

Mr. Speaker: Order. Verbatim quotations from such sources are out of order in questions.

Mr. Davies: It was not a quotation direct, Mr. Speaker. I omitted many of the words. Does the Minister now think that he has helped the general in defining a tactical weapon in those absurd words?

Mr. Thorneycroft: I have made a fairly brief contribution to the point.

Mr. M. Foot: Have we got any, and do they work?

Mr. Thorneycroft: Yes, we have a fairly voluminous supply of tactical nuclear weapons.

Mr. P. Noel-Baker: Does the Minister agree that the use of the word "tactical" about any nuclear weapon of the 10 kiloton or larger range, which is what we have, is very dangerous and self-deceiving?

Mr. Thorneycroft: I have some sympathy with that point of view. I think that it is quite erroneous to talk about tactical weapons as though they were some sort of modern artillery. These are weapons of really devastating power.

Defence Commitments

Mr. Harold Davies: asked the Minister of Defence to what extent it remains the policy of Her Majesty's Government, in view of the danger of retarding the nation's economic development, to retain, as essential for British defence policy, each of the following commitments, namely, those in Hong Kong, Singapore and Malaya, the Middle East, Kenya, Aden and the Persian Gulf, Malta, Cyprus, North Africa, West Germany and Berlin, the Atlantic naval force, the strategic reserve in the United Kingdom, the garrison in the Caribbean and missions to foreign and Commonwealth forces, together with the British contribution to the Western nuclear deterrent; and to what extent this policy has been changed in the past four years in respect of each commitment.

Mr. Thorneycroft: To the extent necessary at any time to defend British interests.

Mr. Davies: Is the right hon. Gentleman distinguishing between British interests, economic and manufacturing, and British focal points of power? Is he aware that while our commitments have risen from 5s. 1d. per week per person when the party opposite came into power to 13s. 1d. now, these areas are defined by John Connell, who knows something about the subject, as "a rag-bag of contradictions"?

Mr. Thorneycroft: It is not my purpose to distinguish between any of these things, but simply to say that the job of the Ministry of Defence is to serve British interests in whichever part of the world we are called upon to do so.

Mr. Rankin: Could the right hon. Gentleman—[Interruption.]

Mr. Speaker: Order. We are now discussing commitments.

Mr. Rankin: —tell me how we would deploy our defence policy in Hong Kong when the water supply in Victoria Island is insufficient and on the mainland it is under the control of the Chinese?

Mr. Thorneycroft: This is, no doubt, one of the problems involved, but if the hon. Member wants to put down specific Questions about specific places he will no doubt do so.

Costs

Mr. Emrys Hughes: asked the Minister of Defence how much defence costs per person per week.

Mr. Thorneycroft: In the 1963–64 Estimates defence will cost 13s. 5d. per person per week.

Mr. Hughes: As an ex-Chancellor of the Exchequer, has the right hon. Gentleman no sympathy with the present Chancellor? Since he has presented a bill for £300 million more than was presented to him when he was Chancellor, does he not think that he should appear today not in a tile hat but in a white sheet?

Mr. Thorneycroft: I think that a country which spends on average 18s. 1d. per person per week on drink and tobacco might spend 13s. 5d. for its defences.

Mr. Healey: Can the right hon. Gentleman say whether he still holds to the view expressed when he resigned from his Treasury post some years ago that we would never get an effective return for our tremendous defence expenditure so long as we tried to maintain both a full-scale nuclear capacity and adequate conventional forces?

Mr. Thorneycroft: I hesitate to ask the hon. Gentleman to read my resignation speech as a whole, but he will see, if he does, that in it I referred to what we spend upon ourselves in softer living as well as on our defences.

Expenditure

Mr. Emrys Hughes: asked the Minister of Defence if he will conduct a further review of expenditure on defence with a view to its reduction.

Mr. Thorneycroft: The cost of our defences is related to the extent of our commitments and I see no immediate prospect of their being reduced.

Mr. Hughes: Will the Minister consider inviting Dr. Beeching to examine the costs in his Department to see if his axe might work there?

Mr. Thorneycroft: I already have quite considerable assistance from the hon. Member himself.

Oral Answers to Questions — ROYAL NAVY

H.M. Submarine "Valiant"

Commander Courtney: asked the Civil Lord of the Admiralty when he anticipates that Messrs. Vickers will commence three-shift working on Her Majesty's Submarine "Valiant".

The Civil Lord of the Admiralty (Mr. C. Ian Orr-Ewing): The building of "Valiant" is at present up to schedule. Messrs. Vickers inform me that six trade groups operated a three-shift system during the construction of "Dreadnought" and they anticipate that these six groups and others will operate shift working at the appropriate time on the building programme for "Valiant" and other nuclear submarines.

Commander Courtney: While congratulating my hon. Friend on that really excellent news, may I ask whether he can confirm, first, that three-shift working will be extended to the second Polaris yard and, secondly, that three-shift working will enable him to cut about one year off the building time for Polaris submarines as compared with the Americans?

Mr. Orr-Ewing: When we inquired of the shipbuilders we asked them about their capability for round the clock working and pointed out that it would be required and that the willingness of the firms and unions to accept this would be considered before placing the order. I cannot give an undertaking on the second point raised by my hon. and gallant Friend, but I can say that we will certainly build these as quickly as we possibly can, with the co-operation of the trade unions.

Hunter-Killer Submarines

Commander Courtney: asked the Civil Lord of the Admiralty if the intended building programme of British Polaris submarines will prejudice the fulfilment of the S.S.K. hunter-killer submarine requirement which is necessary for the protection of British shipping throughout the world.

Mr. C. Ian Orr-Ewing: In the short term I am afraid there must be some prejudice to that programme, but thereafter it will be open to Her Majesty's Govern-

ment to make new decisions about the rate at which nuclear hunter-killers should be built.

Commander Courtney: Would my hon. Friend agree that this is a contradiction of his right hon. Friend's undertaking that the Royal Navy's conventional forces would not be sacrificed to the nuclear commitment? Is it a question of money or of building facilities? If it is the latter, would my right hon. Friend look again at the question of giving an order for a few S.S.K.s to one of the Royal Dockyards?

Mr. Orr-Ewing: It is not a question, in the long run, of building facilities. I am sure that these could be achieved, manned and trained. It is, firstly, a question of finance; and I do not think that this contradicts my right hon. Friend's views. In the long run I am sure that we will make up the three hunter-killer submarines which we will lose in the short term.

Mr. Willis: Is the hon. Gentleman not aware of what his right hon. Friend the Minister of Defence said? He said that other naval decisions would have to be taken on their merits and not in accordance with the Polaris programme. Is this not a case where the Polaris programme is definitely holding up the naval programme?

Mr. Orr-Ewing: I have agreed that in the short term we shall lose three hunter-killer submarines. At the same time, we are going ahead with conventional submarines which will give first-class service in the Fleet. There will be 35 in the operational fleet and 12 modern ones in the reserve; and this should be of tremendous use in the next 20 years.

Obsolescent Ships and Boats

Mr. Milne: asked the Civil Lord of the Admiralty if he will make a statement on the methods of disposing of obsolescent ships and boats.

Mr. C. Ian Orr-Ewing: I assume that the hon. Member is referring to ex-R.N. whalers, or similar boats, surplus to the Navy's need.
As the hon. Member is aware, they are first offered to the Combined Cadet Force and to the Sea Cadet Corps


because the Admiralty accepts a responsibility for providing them with naval training equipment and they are a valuable source of recruitment to the Royal Navy. Any left over are offered first to the Sea Scouts and then to the Ministry of Education for allocation to schools.

Mr. Milne: Is the hon. Gentleman aware of the grave disquiet felt in many parts of the country about the method of his Department's allocation of these ships and boats and the manner in which they are allowed to lie around in certain places and depots when they could be of immense value to many educational organisations? Will he look into this matter more closely than he has done in the past?

Mr. Orr-Ewing: We certainly want to make use of any available boats. If the hon. Member will draw my attention to those he has in mind, I will have the matter examined carefully and sympathetically.

Hydrofoil Design

Mr. Gresham Cooke: asked the Civil Lord of the Admiralty what progress is being made in research into hydrofoil design; and whether orders are being placed for prototype hydrofoil craft for the Royal Navy.

Mr. C. Ian Orr-Ewing: The Royal Navy has not commissioned any current United Kingdom research into hydrofoil craft, or ordered any prototypes. We prefer to develop the hovercraft which in our view offers greater versatility and promise in possible naval roles. However, I understand that the Ship Division of the National Physical Laboratory is now actively engaged on behalf of the Royal Canadian Navy in the second stage of an extensive investigation into the hydrodynamic design of a large hydrofoil ship.

Mr. Gresham Cooke: Is my hon. Friend aware that Russia, America and Italy are running hydrofoil craft which can do 50 knots? Could not these be suitable for ships' tenders in this country? Could not the British Navy purchase one for a few thousand pounds? If these experiments were successful might not, say, the Royal Barge run on hydrofoil as an experiment?

Mr. Orr-Ewing: We are certainly watching the development of the hydrofoil but, as I said, the versatility of the ground effect machine, or hovercraft, has special attractions for us.

Wasp Helicopter

Mr. Willis: asked the Civil Lord of the Admiralty when it is expected to complete full tests of the Wasp helicopter; and when the five commissioned Tribal class frigates will be equipped with this aircraft.

Mr. C. Ian Orr-Ewing: We expect to complete flying and service trials of the Wasp helicopter in time to permit embarkation of some of these aircraft this year. The date at which a particular Leander or Tribal class frigate will receive her helicopter will be determined by the priorities then ruling.

Mr. Willis: Is it not rather deplorable that these ships should have been commissioned and sent out to their stations without their most important weapons? What is the Admiralty doing to get a move on with this?

Mr. Orr-Ewing: I would remind the hon. Gentleman that these ships are equipped with the three-barrelled antisubmarine mortar, and we are very anxious to get on with the equipping of the same ships with the Wasp, but it would have been very rash, and financially wasteful, if we had placed the production order before overcoming the production difficulties of the helicopter.

Mr. Willis: When will these five ships be fitted with the Wasp?

Mr. Orr-Ewing: I think that we have to wait to see where the ships are at the time, but we hope to have numbers of Wasps in our operational fleet by the end of this year. But it would be folly to send a Wasp to, perhaps, the Persian Gulf if we wanted it to play a more important role in N.A.T.O. in the West.

Dockyard, Rosyth (Nuclear Submarines)

Mr. Willis: asked the Civil Lord of the Admiralty how many additional men will be required at Rosyth by the end of 1963 for the work which will be necessary to prepare this dockyard for the refitting and refuelling of nuclear submarines.

Mr. C. Ian Orr-Ewing: As I said in my written reply of 15th March to the hon. Member for Dunfermline Burghs (Dr. A. Thompson), it is too early to be precise about the timing of manpower increases at Rosyth. We shall, however, start to increase the dockyard labour force as soon as we can recruit suitable craftsmen, and a small number of staff, when they have received training in nuclear work, will be appointed to Rosyth dockyard to plan the facilities required.

Mr. Willis: Are we to understand from what the Civil Lord previously said about this refitting depot that it would be necessary whether we proceeded with the Polaris or no?

Mr. Orr-Ewing: Yes, Sir.

Mr. Stodart: Can my hon. Friend say whether he has been taking in a sufficient number of apprentices locally in recent years to enable the Royal Navy to build up a local labour force?

Mr. Orr-Ewing: Yes, Sir. In the last five years we have increased our apprentice intake from 71 to 98, to 145, to 167 and, this year, to 190. I am sure that this will pay a worth-while dividend, not only in the training of young men but in the dockyard as well.

Clyde (Ship Construction)

Mr. Millan: asked the Civil Lord of the Admiralty how many naval ships are to be built on the Clyde in the year 1963–64; how many will be started in the next six months; and what will be the estimated cost of them when completed.

Mr. C. Ian Orr-Ewing: The Clyde is already building an assault ship, a 6,000-ton guided missile destroyer, six frigates and two Oberon class submarines. Four Clyde firms are invited to tender for the two fleet replenishment ships awaiting order and, as I announced in the Estimates Debate, one of the three firms with whom we are discussing the Polaris submarine building programme is at Greenock.
We normally announce our shipbuilding plans as we are ready to go to tender for particular vessels, and we shall follow this practice during the year.

Mr. Millan: In view of the employment position on the Clyde, is it not

possible to bring forward some of these orders a little, and so provide more work now?

Mr. Orr-Ewing: We are examining this position. The total orders on the Clyde are £57 million for naval vessels, of which £40 million actually goes to the firms on the Clyde, so they have a very worth-while contribution to make, and are making a worth-while contribution to the Navy.

Dr. Dickson Mabon: Does the hon. Gentleman agree that on the Clyde there should be built at least one nuclear-propelled vessel in the near future?

Mr. Orr-Ewing: There are rival claims between Merseyside and Clyde-side, as the hon. Gentleman knows.

Scottish Shipyards

Mr. Ross: asked the Civil Lord of the Admiralty how much of the £241 millions to be spent in 1963–64 on new ships will be spent in Scottish shipyards; and what will be the estimated employment arising.

Mr. Ross: The Question should read as referring to £241 million to be spent on new ships to be started.

Mr. C. Ian Orr-Ewing: Well, that takes away part of my Answer.
As I said in the Estimates debate, the figure of £241 million is not the provision for this year's building programme, but the estimated cost of completing over several years the new naval vessels on which some expenditure will start during 1963–64.

Mr. Willis: Can the Civil Lord give some indication of what vessels this very large sum includes?

Mr. Orr-Ewing: It certainly includes Polaris submarines, and there is a very small amount in far a possible aircraft carrier because, as I have said, this sum covers all ships in our plan on which there might be any expenditure in the coming year.

Mr. Lawson: asked the Civil Lord of the Admiralty how much of the increased expenditure on naval vessels in the next financial year will be spent in


Scottish shipyards; and how much new work will be started in the next nine months.

Mr. C. Ian Orr-Ewing: The success of Scottish shipyards in securing tenders in competition with firms elsewhere will govern the expenditure on new orders in 1963–64. Scottish firms suitably equipped will, of course, be given an opportunity to tender.

Mr. Lawson: Will the Minister bear in mind that the Scottish shipbuilding industry, generally, accounts for about 40 per cent. of United Kingdom ships built in any particular year? Will he further bear in mind that we have in Scotland virtually none of the new industries? Would he see that a disproportionately heavy amount of this type of building comes to Scotland?

Mr. Orr-Ewing: Yes, Sir.

Shipbuilding (Contracts)

Mr. Small: asked the Civil Lord of the Admiralty what consideration is given to the unemployment situation when placing contracts for new naval vessels; and to what extent this consideration has weighed in the placing of contracts for new vessels to be laid down in the next financial year.

Mr. C. Ian Orr-Ewing: Our procedure ensures that all areas of high unemployment are given the opportunity to win contracts for naval construction. As most of the warship builders are already in the development districts, most of the contracts for the building of warships go to areas of high unemployment.

Mr. Small: Will the hon. Gentleman recognise that the livelihood of many men in the areas of high unemployment depends on this work? Is he aware that we shall watch acutely the distribution of the orders? Can he state the total value of shipbuilding orders at present?

Mr. Orr-Ewing: The total value of shipbuilding orders is £215 million, of which £150 million is spent actually with the shipbuilders themselves. I am aware of the other point, and I should like to say that it is not a matter only of shipbuilding. For instance, the Royal Navy has placed contracts in Scotland totalling £15 million for N.A.T.O. sites being constructed in Scotland, and we give much

other substantial support in our naval establishments, like the establishment at Lossiemouth.

Miss Harvie Anderson: Will my hon. Friend emphasise the need to improve efficiency and timing?

Mr. Orr-Ewing: Yes, Sir.

Royal Naval College, Greenwich

Mr Reynolds: asked the Civil Lord of the Admiralty how many students have been enrolled for the first year of the three year degree course for electrical engineering at the Royal Naval College, Greenwich, September 1963.

Mr. C. Ian Orr-Ewing: About four probationary assistant electrical engineers will be enrolled this summer. Negotiations are still proceeding for the addition of other Government trainees to this course.

Mr. Reynolds: Does the Civil Lord realise that his Answer means that there are eight or nine vacancies for this course, and that we cannot afford to waste such places? There is no security problem in having ordinary graduates in Greenwich when, at Greenwich, there are foreign officers, some having taken courses in Iron Curtain countries.

Mr. Orr-Ewing: I am aware of these facts. We are finalising arrangements for an additional eight Royal Navy scientific personnel to take this course, and we hope to secure that in September.

Mr. Reynolds: asked the Civil Lord of the Admiralty how many students are at present taking courses at the Royal Naval College, Greenwich.

Mr. C. Ian Orr-Ewing: Two hundred and forty-eight.

Mr. Reynolds: Does the Civil Lord realise that, if properly used, the facilities at Greenwich are capable of coping with just over twice that number of students, and that there is therefore a terrific wastage there? Is he aware that many of those being trained there could be trained at Manadon, and Greenwich put to far better use as a university?

Mr. Orr-Ewing: I would not agree with the hon. Gentleman. My figures show that 330 would fill the accommodation at Greenwich unless further classrooms were


built and, if we did have to remove this course, very heavy capital expenditure would be incurred elsewhere, and it would, of course, interrupt a very important training programme.

Oral Answers to Questions — BRITISH ARMY

Belgian Machine Gun (Manufacture)

Mr. Bence: asked the Secretary of State for War what steps he is taking to enable Scottish industry to manufacture under licence the Belgian machine gun now being purchased from Belgium for Her Majesty's Forces.

The Secretary of State for War (Mr. John Profumo): None, Sir. Our small arms production is concentrated at the Royal Small Arms Factory, Enfield, where the bulk of the Army's requirement for the general purpose machine gun is being made.

Mr. Bence: I am amazed by that Answer. Is the right hon. Gentleman aware that his right hon. Friends are advocating the placing of Government work in development districts, and that the Burgh of Clydebank is in a development district? At one time we had a Royal Ordnance factory there. Is he aware that 3,000 jobs were taken out of Clydebank? Is it not his duty in equipping British troops to place orders in Clydebank for Swedish, Belgian and Italian guns in order to bring these jobs back to Clydebank?

Mr. Profumo: This is a Belgian gun which is having to be made here under licence. Not enough are being made to divide the order, and the prime order must go to the Royal Ordnance factory.

Royal Army Pay Corps (Electronic Computer Organisation)

Mr. Bellenger: asked the Secretary of State for War whether the electronic computer organisation set up by the Royal Army Pay Corps is being utilised by all three defence services.

Mr. Profumo: No, Sir. The existing facilities at Worthy Down are sufficient only for the requirements of the Army.

Mr. Wade: Is the Secretary of State able to say what financial savings have

been achieved by the use of the electronic computer organisation?

Mr. Profumo: Not yet—it is too early—but it is being an extremely great success.

Royal Ordnance Factory, Woolwich (Apprentices)

Mr. Mayhew: asked the Secretary of State for War why he has halted apprentice intake at Royal Ordnance Factory, Woolwich.

Mr. Dodds: asked the Secretary of State for War if he is aware of concern arising from the decision to close down the apprentices training school at Woolwich when this will take effect; and, in view of the need for expansion of training centres for young people, what is being done to utilise the equipment and staff.

Mr. Profumo: No decision has been taken to close down the First Year Apprentice Training Shop at the Royal Ordnance Factory, Woolwich. All that I have decided to do at present is to suspend the normal intake of new apprentices for one year.
About 150 apprentices are already under training at the factory. As the number of craftsmen available to train them is being reduced, a new intake of apprentices next September would overload the apprentice training capacity of the factory.

Mr. Mayhew: Why did the Minister not wait for the result of the inquiry which he set up before he took this serious step? Is not this an extremely bad time at which to close down even temporarily any apprentice training establishment? Is the right hon. Gentleman not setting a very bad example to private enterprise?

Mr. Profumo: It has been closed only to one year's intake and when the inquiry is finished we will decide on its future. I had to do this, otherwise we would have overloaded the percentage in terms of people being trained compared with the number of craftsmen available. I am consulting my right hon. Friend the Minister of Labour to see whether there is any other way we could do this.

Mr. Dodds: While I am aware that no decision has been taken to close down


the establishment, may I ask whether the right hon. Gentleman appreciates that in a town which is suffering so badly from creeping paralysis as a result of decisions taken by the Government this seems very ominous? Can the right hon. Gentleman, therefore, give an undertaking that this valuable equipment and the highly skilled staff will not become redundant in any circumstances?

Mr. Profumo: I do not think that I can add to what I have said about the consultations which I am having with my right hon. Friend the Minister of Labour, or indeed add to what my right hon. Friend said about the general situation when he answered a Question two days ago.

Mr. Mayhew: What is to happen to the pre-apprenticeship learners employed at the Arsenal? Can the right hon. Gentleman give an assurance that if they miss the chance of training there they will not be denied it elsewhere in Government service?

Mr. Profumo: I am looking into all these matters at present.

Mr. Dodds: Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

Unit Transport and Alanbrooke Hall

Mr. Paget: asked the Secretary of State for War (1) what disciplinary action has been taken as a result of failures to comply with War Office instructions that unit transport should be made available to the Royal Army Service Corps on days when it was not required for operational or training purposes;

(2) why the advice of the Minister of Education and the University Grants Committee was not sought before building the Alanbrooke Hall at the Stall College.

Mr. Profumo: No disciplinary action has been taken.
These are matters which the Comptroller and Auditor General has drawn to the attention of the Committee on Public Accounts in his Report on the Army Appropriation Account for

1961–62. I understand that the Committee is going to examine these questions and will be asking my officials to give evidence on them. It would be contrary to custom for me to anticipate the Committee's inquiries by saying anything now.

Oral Answers to Questions — SCOTLAND

Mathematics and Science Teachers

Mr. Hannan: asked the Secretary of State for Scotland if, in view of the grave shortage of mathematics and science teachers, he will extend to them the same favourable conditions in the appointment of principals as obtains in the appointment of classics principals.

The Secretary of State for Scotland (Mr. Michael Noble): I am at present re-examining the provisions regarding these and other posts of responsibility.

Courts, Glasgow

Mr. Hannan: asked the Secretary of State for Scotland if he will consult with the appropriate authorities with a view to introducing legislation to establish in Glasgow permanent sittings of the Court of Session and the Court of Justiciary.

Mr. Noble: The High Court of Justiciary already sits in Glasgow as required. I do not think that there is any need to contemplate a change in the arrangements for the Court of Session.

Mr. Hannan: Is not the right hon. Gentleman aware of the congestion at the Glasgow courts, and will he look into the matter?

Mr. Noble: I am aware of the congestion at the Glasgow courts, but the problem of whether the Court of Session should sit in Glasgow seems to me to be a different one from that of the congestion of the ordinary courts.

Teachers' Salaries

Sir T. Moore: asked the Secretary of State for Scotland what reply he has sent to the headmasters of Belmont High School and St. Margaret's High School, Ayr, in response to their letter of 5th March about teachers' salaries in Ayrshire.

Mr. Noble: My hon. Friend will have had the letter which I sent to him on the subject on 26th March.

Sir T. Moore: Yes, Sir, that is quite true, but will my right hon. Friend bear it mind that there is a great deal of concern among the teaching profession in Scotland at this refusal of the authorities to appoint deputy head teachers in secondary schools? Will my right hon. Friend do his best to persuade the authorities?

Mr. Noble: I know that my hon. Friend appreciates that the appointment of deputy head teachers is in the discretion of the education authorities. Accordingly, it is not open to me to intervene.

Mr. Emrys Hughes: In view of the fact that so many people have come here today specially to hear Scottish Questions, could not the right hon. Gentleman give more satisfactory Answers?

Electricity Board for Scotland

Mr. Hendry: asked the Secretary of State for Scotland when he will give a decision on whether there will in future be one Electricity Board for Scotland.

Mr. Noble: While I appreciate that an early announcement is desirable, I regret that I cannot at present say when this will be possible.

Mr. Hendry: Will my right hon. Friend consider whether he can possibly speed up his answer to the Question in view of the amount of misleading and ill-informed propaganda sent to hon. Members by "Aims of Industry" and similar organisations?

Mr. Noble: I will, of course, try to speed up my decision, but this must not be at the expense of looking carefully at the very complicated problems involved.

Mr. Woodburn: Is the right hon. Gentleman aware that many of us do not want him to make such a decision and have one Electricity Board for Scotland? Is he aware that we are almost convinced at the moment, unless evidence emerges to the contrary, that it would be much better to preserve the North of Scotland Hydro-Electric Board?

Mr. Noble: I am aware that this view is held not only by the right hon. Gentleman but by many others in the House.

Mr. John MacLeod: Is my right hon. Friend aware that authoritative opinion in the north of Scotland is against amalgamation? Why cannot this Board, which has done so much for the Highlands of Scotland, retain its independence?

Mr. Noble: I am certainly aware of what my hon. Friend says, but the problem is not purely one for the Highlands. It is one for Scotland and it is in balancing these matters that I have to take a decision.

Mr. Ross: Surely the right hon. Gentleman has had the report before him for many months. Is he aware that this is bound to create an unsettling feeling? Will the right hon. Gentleman show himself to be as sensitive to the real needs of the people of Scotland as hitherto he has shown himself sensitive to the propaganda of "Aims of Industry"?

Mr. Noble: Yes, Sir.

Salmon (Committee's Report)

Mr. Wolrige-Gordon: asked the Secretary of State for Scotland when the Hunter Committee on Salmon is now expected to report.

Mr. Noble: I understand that the Committee cannot yet forecast the date of its report but it has given priority to the question of drift-net fishing for salmon and is considering whether it is possible to make an interim report on that subject.

Mr. Wolrige-Gordon: Is my hon. Friend aware that this is a matter of considerable urgency for the inshore fishermen of Scotland? Can he, therefore, undertake to implement the findings of the Hunter Report as quickly as possible?

Mr. Noble: I am aware of the inshore fishermen's interest in this matter. I am also aware that Lord Hunter is doing his best to speed up an interim report on this aspect of the whole inquiry, but I think that it is not likely that that interim Report will be available very soon.

School Leavers, Buckhaven and Wemyss

Mr. Gourlay: asked the Secretary of State for Scotland when he received a letter from the Braehead School Parent-Teachers' Association regarding unemployment among school leavers in the


Buckhaven and Wemyss areas; what was the nature of his reply; and if he will make a statement.

Mr. Noble: The letter was received on 18th March, and I am sending the hon. Member a copy of my Department's reply. I understand from my right hon. Friend the Minister of Labour that the number of school leavers registered for employment in the Wemyss area has fallen from 116 to 61 in the last month, and that the Youth Employment Service will continue to do everything possible to find suitable employment for those still seeking work.

Mr. Gourlay: Is the right hon. Gentleman not aware of the irony of the situation when in National Productivity Year there are still 319 school leavers in Fife, including the Buckhaven and Wemyss areas, who are denied the opportunity of increasing the productivity of the country? When is the right hon. Gentleman going to do something about it?

Mr. Noble: As far as this problem is concerned with industrial development, it is one for my right hon. Friend the President of the Board of Trade. I am only too well aware of the problem. I know that the employment of school leavers is a matter of concern. A number of full-time pre-employment courses is already available in technical colleges in Buckhaven and elsewhere. Any further proposals which the Fife Education Authority puts to me will certainly receive my careful consideration.

Mr. Manuel: Will not the right hon. Gentleman recognise that he needs to view this matter with urgency? Is he aware of the bad psychological effect on many schoolchildren when they leave school and are unable to get work and feel that they are not wanted in our society? Will the right hon. Gentleman press on with some solution?

Mr. Noble: I am certainly aware of the urgency. The figures which I have quoted in the Answer are not good enough, but at least they are a good start.

Unemployment, Aberdeen

Mr. Hector Hughes: asked the Secretary of State for Scotland when he received from Aberdeen Trades Council its letter of 4th March, 1963, expressing

concerned at the increasing unemployment in the engineering establishments in Aberdeen, and suggesting amongst other remedies the recommencement of hydroelectric building work, on lines recommended by the Mackenzie Committee Report, and of other similar public projects; what steps he will take to solve the relevant problems of unemployment; and what reply he has sent or intends to send to that letter.

Mr. Noble: I have not received any such letter, but I have ascertained that the hon. and learned Member sent the letter he received to the Board of Trade. I have been in touch with my right hon. Friend about it and have now written to the hon. and learned Member.

Mr. Hughes: Does the right hon. Gentleman realise that he cannot pretend that he does not know of the vast unemployment in Aberdeen? Is it not time that he formulated some constructive plans to absorb the unemployment there? When will the right hon. Gentleman do something?

Mr. Noble: As the hon. and learned Gentleman knows, some of the things which have been announced in the last month or two are specifically for Aberdeen.

Aberdeen Educational College (Demonstration School)

Mr. Hector Hughes: asked the Secretary of State for Scotland why he proposes to close the demonstration school of Aberdeen Educational College; and what he proposes to substitute for it.

Mr. Noble: I refer the hon. and gallant Member to the Answer I gave him on 27th March.

Mr. Hughes: Does the Secretary of State realise that the Principal of Aberdeen University and other distinguished teachers in Aberdeen are against the closing of this demonstration school and that they regard it as wasteful? Will he reconsider the matter and allow the college to continue the good work it has been doing over the years?

Mr. Noble: I am aware that there are people in Aberdeen who think that this demonstration school should go on. But the decision is one primarily for the authority itself in Aberdeen, and I think that in this case it is right.

Mr. Hendry: Is my right hon. Friend aware that a great many people in the north-east of Scotland are grateful to him for the very prompt action he has taken in that part of the world to increase the supply of teachers and they have great confidence in the action he is taking to provide training in teaching practice in other schools in the area?

Mr. Noble: I thank my hon. Friend for that. The education authority in Aberdeen is probably the best staffed in Scotland, and I hope that it will remain so.

Land (Ownership)

Mr. Rankin: asked the Secretary of State for Scotland whether he will take the steps necessary to enable him to issue as soon as possible a report on the present ownership of land in Scotland, in view of the fact that the last one was made in 1874.

Mr. Noble: I am not clear that any useful purpose would be served by preparing a report of this kind.

Mr. Rankin: Even if it is of no interest to the Secretary of State, does not he realise that it would be of interest to many other Scotsmen to know who owns Scotland? Does he not know that many changes in land ownership have taken place since 1874 at prices which are very shocking and which have affected the whole redevelopment of Scotland? Will he reconsider the matter?

Mr. Noble: I realise that there are many people in Scotland who might be interested in the compilation of a report of this sort, but the work to produce it would be colossal and I cannot see that it would meet any useful purpose whatever except interest.

Mr. Woodburn: Is the right hon. Gentleman aware that he himself is the biggest land owner in Scotland?

Mr. Noble: Alas, yes.

Mr. Rankin: In view of the entirely unsatisfactory nature of the Answer, I beg to give notice that I shall raise the matter at the earliest opportunity.

Building Land (Price)

Mr. Hoy: asked the Secretary of State for Scotland what action he is taking to control the price of building land in Scotland.

Mr. Noble: It is the Government's policy to encourage local planning authorities to ensure that enough land is allocated for development in the right places. This is the most constructive course.

Mr. Hoy: Does not the right hon. Gentleman know that, within the last fortnight, there has been in Edinburgh a sale of building land at an exorbitant price, and that this sort of thing makes it impossible for municipalities or the private builder to provide housing at reasonable prices? Will he take positive action to put a stop to this racket?

Mr. Noble: One should not draw conclusions from one particular case. Over the past few years, there has been no noticeable increase in the price of land in Scotland. In fact, the cost of land is rather less than 5 per cent. of the cost of housing.

Geriatric Patients, Edinburgh

Mr. Hoy: asked the Secretary of State for Scotland how many geriatric beds will be provided by the extension to Liberton Hospital; and how many persons are at present on the waiting list in Edinburgh.

Mr. Noble: One hundred and eighty-four and 430 respectively.

Mr. Hoy: Is the Secretary of State aware that the plight of these geriatric patients is rapidly reaching scandalous proportions? Since there are so many on the waiting lists, can he take some action to speed up the provision of beds for this class of patient?

Mr. Noble: I agree that the situation is urgent. As I said in my reply to the hon. Gentleman on 27th March, the regional board is already urgently considering how more beds for geriatric patients can be provided. It is hoped to provide about 150 additional beds for these patients by the autumn of this year.

Highlands (Road Transport)

Mr. Rankin: asked the Secretary of State for Scotland, having regard to paragraph 103 of the Report on Transport Services in the Highlands and Islands, what steps he is taking to ensure that the Highland road system will be able to


catch up with the development of road transport and to fill the vacuum left by contraction of rail transport.

Mr. Noble: To meet the growing needs of road transport, the Government are providing more than £2½ million a year for the construction or improvement of Highland roads. I am considering what special needs may arise from rail closures and how we might meet them.

Mr. Rankin: Does the Secretary of State realise that the sum of money which he mentioned is described in the Report as being utterly inadequate for the creation of the necessary roads in the north of Scotland? Does not he know that, if the Beeching Report is implemented, more than double that sum will be required? Will he consider the matter of road development in the light not only of present needs but of potential demand?

Mr. Noble: The hon. Gentleman is quite right in saying that, if the Beeching Report is agreed and if the closures are carried out, as he suggests, the amount of money available for the roads is certainly not enough to provide adequate transport services in some areas. It has been made very clear by my right hon. Friend the Minister of Transport and by myself that adequate roads are a precondition of closing some of these lines.

Mr. Ross: Will the Secretary of State make clear that the last word in respect of rail closures in Scotland, be it North or South, rests not with him but with the Minister of Transport?

Mr. Noble: Technically, it rests with him, but, as he has said, he will consult me before any closures are made. As the hon. Gentleman knows, the decision in this and the other matters will reflect the unity of the Cabinet, not the division.

Cumbernauld New Town

Mr. McInnes: asked the Secretary of State for Scotland if he will institute an inquiry into why Cumbernauld New Town Corporation has only built an average of 276 houses per annum since the new town was designated in 1956; and if he will indicate to the new tows corporation that this output is making little contribution to Glasgow's overspill of 100,000 families.

Mr. Noble: No, Sir. The development corporation is surmounting the difficulties which delayed progress in its early years, and output is rising steadily. In 1962, 556 houses were completed, and 1,279 houses are at present under construction.

Mr. McInnes: Is the right hon. Gentleman aware that even the increased output reached recently will in no way help to solve the enormous problem of the overspill of 100,000 families? Five hundred houses per annum are not enough. We want 5,000.

Mr. Noble: We certainly need more than 500, and this year we shall get them; but I am not satisfied, nor is the development corporation, even with the existing speed-up. We aim to do much better in future.

Mr. Bence: Is the right hon. Gentleman aware that not only do we want a faster rate of house building in Cumbernauld New Town, but we want some new industries as well or it will be a dormitory town only?

Mr. Noble: I am sure that these will follow.

Girls (Day Release)

Mr. Lawson: asked the Secretary of State for Scotland what was the number in Scotland of girls under 18 years of age being given day release from employment for further education at the latest available date; and what percentage of girls under 18 years of age in employment this number represents.

Mr. Noble: In session 1961–62 the number was 3,226, representing 3·8 per cent. of those in insured employment.

Mr. Lawson: Is not the right hon. Gentleman ashamed of this figure? Is it not a dreadful reproach on the employers in Scotland? Will he see that something far better than this is done in future?

Mr. Noble: I am not ashamed of the figure, but I am not by any means satisfied with it. As the hon. Gentleman says, there are some employers in Scotland who are not as enthusiastic about training their young girls as they should be, perhaps because they fear early marriage. I do not agree with this view. I will do everything I can to encourage a better figure.

BALLOTS FOR NOTICES OF MOTIONS

Commonwealth Administration and Co-operation (Machinery)

Mr. Wall: I beg to give notice that on Friday, 26th April, I shall call attention to the need for improved methods and organisation of Commonwealth co-operation, consultation and administration, and move a Resolution.

Construction Industries (Efficiency)

Mr. Prior: I beg to give notice that on Friday, 26th April, I shall call attention to the need for improving efficiency in the construction industries, and move a Resolution.

Press and Mass Communication

Mr. Robert Cooke: I beg to give notice that on Friday, 26th April, I shall call attention to the present state of the Press and other means of mass communication, and move a Resolution.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Orders of the Day — BUDGET STATEMENT

3.32 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling): I hope that the Committee will bear with me if, for reasons which I will explain, I depart to some extent from the conventional pattern of the Budget statement. It has become customary not to announce tax changes until some way through the speech. The Budget statement has also continued to be influenced by what Aneurin Bevan once described as the conventions of a pastoral society, which regarded the Budget solely as an annual set of accounts, and treated tax changes as incidental to the presentation of these accounts.
The purpose of the Budget has, of course, for some time now been universally recognised as being far wider than this. The issues with which any Chancellor must deal cover our whole economy, and any tax changes should be incidental to these wider issues. Nor, as a matter of practice, is there any reason why tax changes should not be announced at the beginning of the statement.
I must as usual present the annual Exchequer figures and we must provide for the annual renewal of Income Tax, I regret to say. But the drawback of the conventional pattern is the danger of confusing necessary annual details and statements with the broad economic picture, and the tendency for tax changes, large and small, to be jumbled together at the end of the speech. To my mind, this can obscure the main theme and purpose of a Budget, which should be crystal clear.
The theme of this Budget is expansion: expansion without inflation, expansion that can be sustained. Of the need for economic expansion, there can be little question. If we are to play our full part in this dangerous world, if we are to build for our own people the standard of life they desire,


if we are to increase our aid to the peoples of Africa and Asia who still count in shillings what we count in pounds, then we must have more rapid and more steady economic expansion.
The purpose of the Budget can also be clearly stated: it is to do the Government's part in achieving the rate of growth broadly described as the 4 per cent, target, which we have already accepted in the National Economic Development Council.
I am confident myself that this is not only a desirable target, but also one that can be attained, and attained without any strain upon our currency, if we as a nation have the will to achieve it. Indeed, I would go further. Not only is it untrue that expansion and a strong pound need conflict: in fact, the two depend upon one another. Sound expansion without inflation will not weaken sterling, but strengthen it.
I stress that this is a task for the whole nation. Of course, the Government have primary responsibility; of course, we must take the initiative. But Government policy alone cannot achieve the objective. We must have the cooperation of management and of unions in bringing British industry up to the peak of efficiency and in assuring the stability of incomes, and, therefore, of costs, which is quite essential if we are to win the exports upon which this rate of growth depends. This co-operation we seek not by appeals, but by action, action that will pave the way for a joint effort.
The purpose of the Budget is, therefore, to do the Government's share towards this target of a 4 per cent. rate of growth in the confident belief that as the Government set the lead so management and unions as well will join in a national drive to achieve a national objective.
These are the reasons why I intend to depart from the conventional pattern of a Budget statement. I propose before coming to the main theme, which I have just described, to deal with a number of matters small and large, including a number of tax changes. They must be dealt with in this Budget, and some of them are very important, but these items are extraneous to the main theme, which is economic expansion.

EXCHEQUER OUT-TURN, 1962–63

I begin with a brief description of the Exchequer out-turn last year. The main details are shown in the first three tables of the Blue Paper.

Total revenue last year was £6,794 million; that is, about £4 million below the estimate. Expenditure above the line came out at £6,441 million. £76 million above the Budget estimate. The whole of this increase was in the field of Supply expenditure. The result above the line was a surplus of £353 million, that is, £80 million less than the Budget estimate.

Net payments below the line, at £419 million, were £88 million less than expected. The cost of the additional release of post-war credits was more than offset by a fall in Exchequer lending, mainly to the nationalised industries. Thus the overall deficit was £66 million, a decrease of £8 million on my predecessor's estimate of £74 million.

One element in the financing of this deficit is, of course, borrowing from the public, and the Committee will like to know that £180 million was contributed by National Savings. The total of National Savings remaining invested has increased by £300 million. These figures are considerably higher than for 1961–62. For this most satisfactory achievement I am sure that the Committee will wish to join me in thanking the many voluntary workers in the National Savings movement led by Lord Mackintosh.

The new Defence Bonds are already on sale and the new Savings Certificates will be on sale next month. The gap in the sale of certificates has been unavoidable. It has caused some difficulties for voluntary workers, which I regret. Lord Mackintosh, with whom I have worked closely throughout, joins me in emphasising that the need for large and regular National Savings is as great as ever. We are confident that the new securities will help the National Savings Movement in its valuable work, particularly for the small saver.

My predecessor announced that this year's Finance Bill would contain provisions to bring to an end Schedule A Income Tax on owner-occupiers of residential property, but that it would


depend on revenue considerations whether this could be done in one year. I was happy to inherit this undertaking, for I have never believed that Schedule A as a tax on the occupation of houses, rather than on profits drawn from owning them, is justifiable.

I propose now to abolish Schedule A altogether. In the case of owner-occupiers of residential property, I propose that Schedule A shall be brought to an end in one operation this year. They will not be asked to pay again. For this purpose, the term "owner-occupier" will include not only freeholders, but all those, including leaseholders, who at present pay tax on what is called "beneficial occupation". There will, however, have to be special provisions to cover long leaseholders who pay ground rents, those who pay feu duties, employees who enjoy beneficial occupation as an emolument and other marginal cases.

The same rule will apply to all nonresidential owner-occupied property, including business premises, farms, sports-club grounds, and so on.

In the case of properties owned and let for a profit, I propose to substitute for Schedule A a system of direct taxation of rents, including ground rents, and other income arising from property. Due allowance will be made for the actual expenses of maintenance, insurance, management, etc. In simple terms, profits from property ownership will be calculated like other business profits.

This particular reform cannot for practical reasons come into effect this year. For 1963–64, the existing system of a charge under Schedule A on the annual value together with a charge on "excess rents" under Schedule D, will continue to apply to rented property. The legislation dealing with the new system will, however, be included in the Finance Bill, and the new system will come into effect from the year 1964–65.

The new charge will have to cover not only rents but other forms of consideration for the use of property. In particular, there will have to be a specific charge on future premiums for leases graduated on a scale according to the length of the lease, and this charge will operate from 1963–64, as a counterpart to the abolition of Schedule A on rental values in excess of the rent paid.

Where an owner occupied residence formed part of an estate which was managed as a unit in 1962–63, the owner may elect to retain the benefit of the existing practice under which the maintenance expenditure on the residence can be taken into account in fixing the liability on the estate, on condition that the current annual value of the residence is also brought into account. I include this provision to avoid the danger that these taxpayers might be worse off as a result of the abolition of Schedule A. There will be appropriate transitional provisions.

As a corollary to the Schedule A changes, I propose that Schedule B on amenity lands shall be abolished. I shall also be introducing certain provisions relating to the tax treatment of commercial woodlands. Royalties from quarries of sand and gravel, sandpits, gravel pits and brickfields will be subject to deduction of tax at source in the same way as other mineral royalties.

I am also introducing a provision, to take effect this year, for treating members of approved housing co-operative associations in the same way as owner-occupiers.

Owner-occupiers, who at present pay their Schedule A tax direct on 1st January, will cease to pay as from 1st January, 1964, except in some cases as regards tax on feu duties and ground rents. They will have no Schedule A bill on that day. Those whose Schedule A liability is taken into account in their Pay-As-You-Earn coding will see the effect on their P.A.Y.E. deductions on the first pay day after 5th July.

The cost of these changes will be about £35 million in 1963–64 and of the order of £48 million in a full year.

LAND TAX

The abolition of Schedule A calls in question the future of the old Land Tax which is collected along with it. It now yields only £200,000 a year from some 80,000 or 90,000 assessments. I have, therefore, decided to abolish it with effect from 25th March, 1963, the end of the last land tax year. No redemption payment will be due on land which changes hands after that date.

HOME BREWING OF BEER

There is one other agreeable consequence. Under the present law, people who brew beer either for their own consumption or, in the case of farmers, for consumption by their workpeople are required to take out an Excise licence and, in some cases, to pay duty based on the Schedule A valuation. The amount of revenue involved is very small indeed, and is probably less than the cost of collection. The abolition of the Schedule A valuation system provides a convenient opportunity for getting rid of these licences. So the private citizen will have the same freedom to brew beer as he already has to make wine.

MINOR TAX CHANGES

I come now to a number of minor tax changes, some in the field of Customs, some in the field of tax Inland Revenue.

E.F.T.A. IMPORT DUTIES

First, some changes affecting certain of the duties charged on imports from our partners in the European Free Trade Association.

Under the Stockholm Treaty we must, by 1965, eliminate the protective element in the revenue duties charged on certain goods coming from other countries of the E.F.T.A. Last year, my predecessor made a start in this direction by introducing reduced rates of E.F.T.A. duties for certain goods. As the E.F.T.A. timetable for the reduction of protective tariffs generally has been accelerated, it is right that we should take parallel action in reducing the protective elements in the revenue duties. I therefore propose as from tomorrow to make reductions in favour of our E.F.T.A. partners of roughly the same magnitude and in the same duties as was done last year.

MATCH DUTY

I intend to introduce certain improvements in the control and collection of the match duty operative from 1st September next.

TOBACCO DEALERS' LICENCES

I also propose to abolish the system of Excise licences for the sale of tobacco. The purpose of these licences is not to produce revenue—they cost only £1 for

a four-year period and yield about £100,000 a year—but to assist in the control of the Tobacco Duty. I am now satisfied that they can be dispensed with without risk to the revenue: and I do not think that their retention on non-revenue grounds could be justified. The work of issuing licences is not inconsiderable and abolition will accordingly give a useful administrative saving.

Since there are about 400,000 outlets for the sale of tobacco—about one for every 50 smokers—abolition of licensing could not be expected to lead to any increase in total sales; nor is any appreciable change in the pattern of trade likely. There is, therefore, no question of this decision interfering in any way with the Government's campaign to make people aware of the dangers of smoking, particularly as a cause of lung cancer.

TELEVISION LICENCE EXCISE DUTY

I have decided to abolish the £1 Television Licence Excise Duty, which was imposed in 1957—though, as I shall explain, this will not affect the cost to the viewer. The B.B.C. now faces a steep rise in the cost of its home services—principally for the provision of its second television service. This can, as a result of abolishing the duty, be met without an increase in the cost of the television licence to the viewer in the immediate future, which would otherwise be inevitable.

The abolition will be effective from 1st October next. The cost in the present financial year will be £7¾ million, and in a full year approximately £13 million. The viewer will then pay a £4 licence fee instead of £3, plus £1 duty, as at present.

The change in the basic licence fee—though, I repeat, no change in the amount actually paid by the viewer—will require new regulations under the Wireless Telegraphy Act, 1949, and these my right hon. Friend the Postmaster-General will be laying in due course. Since the proceeds of licence revenue are paid to the B.B.C. through the Broadcasting Vote, a Supplementary Estimate for that Vote will be presented in due course.

THE REGULATOR

I turn now to the regulator. I propose to extend for a further year the power enabling the Treasury to operate


the Customs regulator, that is to say, the power to raise or lower certain indirect taxes. When the regulator was originally introduced in 1961, there was general agreement on both sides of the Committee that there should be adequate Parliamentary control over its use; and that was provided by the exceptional measure of making all regulator Orders subject to affirmative Resolution, not within the usual 28 sitting days, but within 21 calendar days. That means of course, in practice, that a regulator Order could not be made during most of the Summer Recess unless the House were recalled, and to that extent it reduces its flexibility.

This seems a necessary provision when any question of increasing taxation is involved, but the arguments are much less compelling in relation to a possible reduction. I propose, therefore, to seek the agreement of the House in the Finance Bill for making reductions, and only reductions, subject to affirmative Resolution within 21 sitting days—increases remaining subject to affirmative Resolution within 21 calendar days.

INCOME TAX

I come now from those Customs points to some points affecting Inland Revenue. The Finance Bill will give effect to two proposals I have already announced, namely, to make it clear that tax is chargeable on the increased payments from United Kingdom funds that form part of the pensions of certain non-resident civilians who were formerly in Indian Government service; and, secondly, to increase the income limit for purposes of the dependent relative allowance from £155 to £180 to take account of the recently authorised increases in standard National Insurance pensions.

I would also like to give advance notice of a change in the child allowance provisions to operate from 1964–65. It has long been a source of complaint that when a child's income exceeds the income limit, by however small an amount, the child allowance is wholly lost to the parent. To meet this situation I propose in such cases that the child allowance shall not be lost but shall be reduced, pound for pound, by the excess of the child's income over the income limit.

In practice, this provision will impose a large additional work burden on the Inland Revenue, and in view of its other current commitments it cannot be faced this year, but, as I have said, the legislation will be in this year's Finance Bill, and the new tapering will operate for the year 1964–65. A special procedure Resolution will be required to permit the inclusion in the Bill of a provision which will take effect in a future year.

EXPENSIVE MOTOR CARS

I turn now to a point relating to motor cars. The 1961 Finance Act limits tax allowances for business cars to those appropriate to a car costing £2,000. This restriction, which I fully supported at the time, and which, in principle, seems to me justifiable, has in practice been more severe in its effects on top quality cars than had been expected. It is argued, for example, that a businessman can have three new cars costing £2,000 each in six years and get the full depreciation allowed, but that if he buys a car for about £6,000 and keeps it for six years he gets an allowance based only on £2,000.

I think that there is force in this contention. I am also concerned about the position of the Rolls-Royce car and other quality British cars, whose prestige has a great significance for British engineering exports throughout the world. I therefore propose to introduce a new system whereby the allowance for a car in the first year, when it qualifies, will be limited to £1,100, which is the present first year's limit for cars costing £2,000 and over. In succeeding years the allowances will be limited to a figure of £500. If and when the point is reached at which the allowance would be lower than £500, it will be given in full.

The broad effect will be to restrict the allowances for expensive cars in the early years, but the restriction will diminish as time goes by, and the businessman who keeps his £6,000 car for eight years will, in the end, have, broadly, his full depreciation allowed. But it will no longer be possible, as it was before 1961, to get tax relief straight away on over half the cost of these expensive cars. I think that this scheme will preserve the basic


purpose of my predecessor's original proposals, but will remove a real anomaly.

ESTATE DUTY

Now I have something to say on Estate Duty. Last year, as the Committee will remember, the exemption limit was raised from £3,000 to £4,000. This year I propose to raise it to £5,000, with appropriate adjustments in the rates for estates just over that amount. Altogether about 12,000 estates will be exempted from duty and another 17,000 will get some relief—if the hon. Member for Cardiff, South-East (Mr. Callaghan) does not like it he can vote against it when the time comes.

Mr. James Callaghan: The only point I was trying to make to the right hon. Gentleman was that it would cost him only £8 million if he relieved all estates up to £10,000. Instead of making a trifling concession like this, why not do the thing properly?

Mr. Maudling: The band between £8,000 and £20,000 seems to be getting rather narrow.
The change will take effect in the case of deaths occurring after today.
I propose to make one other Estate Duty change which, though minor in itself, will, I believe, be generally welcomed. Under a provision introduced in 1951 there is an Estate Duty exemption in favour of buildings of outstanding historic or architectural interest given or bequeathed to non-profit-making bodies to secure their preservation for the public benefit. I propose to extend this exemption to land of outstanding natural interest which is given or bequeathed to bodies such as nature conservancy trusts.

MINERAL DEPLETION

During last year's Finance Bill debates there was considerable support for the proposal that tax allowances should be granted to mineral operators in respect of sums laid out on the purchase of mineral-bearing land or rights to work minerals. I have decided to treat these minerals as stock in trade by giving an allowance in respect of United Kingdom minerals purchased for lump sums that are worked after today, whether acquired in the past or the future. The total allowances will not, of course, exceed the capital amount paid less any residual

value, or, in the case of minerals acquired in the past, a due proportion of that amount corresponding to the future extractions. There will have to be detailed provisions in the Finance Bill to safeguard the Revenue against excessive allowances, and it will now be discussing the scheme with representatives of the industries concerned.

GUARANTEED 2¾ PER CENT. LAND STOCK

It will be necessary to include provision in the Finance Bill for the redemption of guaranteed 2¾ per cent. Land Stock, 1921, or after, the sinking fund for which will be full in the coming year. The original terms of issue provided that redemption was to be at such time as Parliament might direct.

PROVISIONS AGAINST AVOIDANCE

I might mention here that I have two proposals designed to protect the Revenue, both of them arising out of recent decisions of the courts. First, Estate Duty. Gifts made in consideration of marriage are exempt from the normal five-year rule. There is no doubt that this exemption was intended to apply only to gifts made to persons within the marriage consideration, that is, the parties to the marriage and their issue; but it now appears that other members of the family can be benefited at the same time without the exemption being forfeited. I propose to limit the relief to gifts made to persons within the marriage consideration. The same point arises in relation to Stamp Duty. The second proposal relates to the ad valorem Stamp Duty on mortgages and other securities. An easy way has been discovered of avoiding this duty, and I propose to introduce legislation to block it. Neither of these proposals will be retrospective.

The cost of all the minor tax changes I have mentioned will be £10 million in 1963–64 and £26 million in a full year. These figures include the effect of abolishing the Television Licence Excise Duty.

TAXATION OF GAMBLING

I turn now to the question of gambling. As the Committee will be aware, my hon. Friend the Financial Secretary said last year that a review would be made of the whole field of gambling, and accordingly,


I asked the Customs and Excise to study the practical problems involved. Experience of the past, and particularly that of my right hon. predecessor the Member for Woodford (Sir W. Churchill), clearly enjoins on any prudent Chancellor the need for great caution in this field. Yet it is one that cannot properly be ignored. There are two reasons for this.

First, there is a growing feeling, which I share, that gambling is a form of expenditure which should contribute towards the rising cost of social and other Government expenditure. The extension of betting, and the development of new varieties of gaming, have lent strength to this feeling. Secondly, the present system whereby some forms of gambling are taxed while others are not is clearly unsatisfactory. I have, therefore, been looking at the whole field with the purpose of discovering a general system of taxing gambling which will be both fair and effective.

The studies we have made to date have brought out the many difficulties. In the first place, the amount actually spent on betting is far less than figures often quoted. These represent the total turnover, which is many times higher than the net expenditure. No one can say with any certainty what is the total turnover on commercially organised betting still less on gaming, but figures in the region of £700 million a year or more have been suggested. Most of this money, however, is returned as winnings which may in turn be restaked over and over again. The net expenditure on betting, that is, the amount of money by which the betting public is out of pocket, is very much smaller than the turnover: it is probably not much more than £100 million a year.

Then there are the great practical difficulties involved in establishing a form of taxation in the field of gambling which can be properly enforced. What weighs even more with me, however, are the considerable social issues involved. The recent legislation has cleaned up the scandals associated with illegal bookmaking, and it would be very serious if this process were reversed. Finally, the levy system in support of the horse-racing industry is still in its early days, and, as the figures recently published show, it is far from fully effective as yet.

I have, therefore, concluded that I need to make much wider studies of the practical and social issues involved than has been possible so far, before I can, with confidence, recommend to the Committee a new tax on gambling which would be fair, effective and socially desirable. Meanwhile, because we have as yet no adequate information about the extent and nature of gaming, I propose that the Customs and Excise should compile a register of all gaming institutions, including in this those often very profitable machines known as one-arm bandits. With this information I should be in a position to judge the practical considerations involved in taxing gaming as part of a comprehensive approach to the taxation of the whole field of gambling.

TAX REFORM AND SIMPLIFICATION

I turn now to the questions of tax reform and simplification. In the various proposals I have to lay before the Committee I have borne in mind the need for tax simplification. Schedule A, I think, is a good example. To my mind, this simplification should be a continuous process.

My predecessor referred to the question of amalgamating Income Tax and Profits Tax into a single corporation tax. The Inland Revenue have discussed a scheme for this purpose on a confidential basis with certain experts drawn from outside bodies. As the Committee may well be aware already, these discussions have led to the advice from industry that schemes which have been considered for the amalgamation of the two taxes are not satisfactory.

I accept this advice, but I am sure there are improvements that can be made in the Income Tax code for companies, and I should like to find a common basis for assessment for Income Tax and Profits Tax. The Inland Revenue is examining with the outside experts the possibilities of bringing taxation of company profits for Income Tax on to an accounts basis, as it is already for Profits Tax, which will remove many of the complications and anomalies that are inherent in the present provisions dealing with the opening and closing years of a business and give rise to so many difficulties.

In the meantime, I must propose some amendments to the law in this field to prevent widespread avoidance in relation to the closing years of a trade or profession.

Another proposal that is very topical at the moment is the introduction of a turnover tax, or an added-value tax of a kind that is common on the Continent. Supporters of this tax argue that it provides what is called a built-in incentive for exports, Whatever case there may be on other grounds for broadening the base of indirect taxation, I have never been convinced that the substitution of an added-value tax, either for Profits Tax or for Purchase Tax, would provide, in practice, an effective incentive to exports in the sense of an opportunity or encouragement to our manufacturers to sell their goods abroad more competitively than they do at present. It would certainly not increase the return on export sales: the encouragement to export would arise only from reducing the return in the home market if the manufacturer did not pass on the tax to the consumer, which seems to me unlikely.

I recognise, however, that many people do believe that a tax of this character would strengthen our economy. Neither I, nor my advisers, would claim for Whitehall a monopoly of knowledge in these matters. Much would depend on how businessmen would react to such new arrangements; on this point there is room for considerable controversy.

I have, therefore, decided to ask Mr. Gordon Richardson, Chairman of J. Henry Schroder, Wagg and Company, who was a member of the recent Jenkins Committee on Company Law, to conduct an investigation into the practical effects of instituting in this country a turnover tax on the pattern generally known in Western Europe, either in addition to existing taxation, or in substitution either for the Purchase Tax or Profits Tax or both.

This investigation, in which the Inland Revenue and the Customs and Excise will fully participate, will be carried out urgently and will enable the full facts of this controversy, which I do not think are yet widely known, to be made available for public discussion and for the formulation of policy.

MAIN THEME

I turn now to the main theme of this Budget: expansion without inflation and the achievement of the 4 per cent. growth target. Before deciding what measures the Government should take to this end we must analyse the present state of the economy, and the prospects for the economy and for the Exchequer in the coming financial year.

STATE OF THE ECONOMY

In the first half of 1962, there was a brisk rise in demand and output. Exports rose by 5 per cent. between the fourth quarter of 1961 and the second quarter of 1962, and industrial production by the middle of the year had more than regained the ground lost in the second half of 1961. At the same time, the action taken in July, 1961, had secured a substantial improvement in our balance of payments and there was no doubt that the economy was more competitive and costs more firmly under control than they had been for some time.

In the second half of the year the trend changed. There was a slowing down of the growth of world production and trade. This reflected itself in our exports, which stopped rising, thus removing the main force which had been supporting the increase in activity at home. Unemployment, which had not fallen with the increase in production in the first half of the year, began to rise at a much faster rate, and it seems likely that continuing pressure on costs and prices led manufacturers to greater economy in the use of manpower. Finally, the severe winter after Christmas led to a very large addition to the total of unemployed.

In the autumn and winter a number of measures were introduced both to relax restriction of credit and to stimulate the economy. Some of these measures, such as the release of post-war credits and the substantial Purchase Tax cuts, are already taking effect, as can be seen particularly in the demand for motor cars. Others, such as the improvement in the capital allowances, take longer to produce their full effect.

ECONOMIC PROSPECTS

The position we have now reached is one where there is substantial underemployment of resources, but where costs


have been held stable in relation to those of our competitors. A projection of the existing trends can give us some indication of where our economy would be heading if no changes were made in the Budget, though there are inevitably great uncertainties about any such projections.

The prospects for world trade as a whole are that it will increase at a much slower pace in 1963 than in recent years. This is bound to be reflected in our exports of goods over the year. Exports of services have been doing rather better lately and may continue to do well in 1963.

At home, fixed investment, which, broadly speaking, has been running nearly level in total in the last twelve months, may begin to grow again in the course of the year. Within the total, public sector expenditure has been rising and the rise is likely to accelerate; in the private sector the fall in investment in manufacturing seems likely to continue but may slow down, while in housing and some of the service industries there could be a change to a definitely rising trend.

The construction industries are likely to be very heavily loaded this year, in consequence of the increases in public investment already announced, and the load will, of course, be further increased for a good many months to come by the backlog of work delayed in the winter.

Real personal incomes have been rising, though less in 1962 than was originally expected, and some further rise could reasonably be looked for in the year to come without any more tax changes being made today. Increased National Insurance benefits and the reduction of prices through lower Purchase Tax play a part here. With rising personal income there should be a moderate growth of personal consumption.

Public consumption, in real terms, has risen in the last two years at a rate of about 4 per cent. a year, and must be expected to continue rising at about the same rate. The forecast of trend is, of course, consistent with the picture presented by the Estimates, to which I shall refer in more detail later.

Finally, there is the element, always a very difficult one to forecast, of investment in stocks. We have recently had a fairly low rate of stock accumulation,

and it would seem reasonable to allow for an increase rather than a decrease during the coming year. But there is no reason to think that the present ratio between stocks and output is such as to call for a large-scale stock accumulation.

The outlook for demand as a whole suggests that there will be a rise in national output this year, but it would be unlikely to reach 4 per cent. over the whole year, nor would it be as vigorous as our economy can sustain. I repeat that this is a forecast of what would happen if there were no changes in the Budget.

EXTERNAL POSITION

At this stage, I must say something about the external position and the future of sterling. We can reasonably hope for some continued improvement in our current balance this year. On the other hand, we must expect that our long-term capital outflow will also tend to increase. The needs of other countries for economic aid are rising. In the last two years we have experienced a substantial inflow of capital in conditions which are not likely to be repeated this year. The change on the capital side might, therefore, well offset any improvement on current payments. But, as shown by the figures for 1962 which were published last Thursday, the underlying position from which we start is much sounder than has sometimes been realised.

I absolutely reject the proposition that a vigorous economy and a strong position for sterling are incompatible. A healthy expansion based on increasing efficiency and control of costs is the key to the strength of sterling. Of course, if expansion leads to inflation and to rising costs, then it cannot be sustained, both for external and for internal reasons. So long, however, as we can keep our costs steady and competitive, I am convinced that our basic strength is such that we shall have no need to be deflected by external factors from a policy of modernising and expanding our economy.

It is, of course, possible that in the early stages of a programme of more vigorous expansion, imports may rise faster than exports. But the pace at which imports are likely to rise with expansion is frequently over-estimated because there is normally a lag in the building up of stocks to correspond to


higher levels of output. Moreover, in so far as there is a stocking up movement related to expansion, in effect the building up of working capital, then I think that it is perfectly reasonable and sensible to finance such a movement out of our reserves or out of our borrowing facilities in the International Monetary Fund and elsewhere.

This is surely what these various facilities exist for. It is wrong to use reserves or borrowing facilities to boost up an internal position which is unsound because costs, prices and incomes have got out of hand. But it is equally unsound to refuse to use reserves and borrowing facilities for the purposes for which they exist, namely, to deal with temporary situations and prevent temporary difficulties obstructing the proper long-term development of the economy.

Sterling is subject to many influences. As an international currency it is to some extent open to the shifting currents of world trade and payments, and to political developments. But we must always distinguish between the intrinsic strength of sterling, which is what is most important, and temporary movements of confidence. So long as our economy is sound and our position competitive, the intrinsic strength of sterling must be great. We may face short-term fluctuations of one kind or another, but we have substantial resources available to meet them.

In addition to our first-line gold and dollar reserves, we have a stand-by arrangement with the I.M.F. which permits us quick access to 1 billion dollars of external finance—and this is only part of our Fund drawing rights, which total nearly 2½ billion dollars. And in saying this I have taken no credit for the dollar securities we own, which naturally fluctuate in value, but average around 1 billion dollars.

These are all large, tangible assets which we have available. In addition, there is the intangible asset of the developing co-operation between countries of the free world in tackling monetary problems, not least in dealing with speculative attacks against particular currencies. The Committee will, of course, be aware that at times during the past two months or so sterling has been subject to speculative pressure of this kind.

We have, therefore, called upon the support available to us from other central banks, which has been willingly given. In all, 250 million dollars have been advanced to us during the months of February and March, and these borrowings have, of course, been reflected in the published figures of the change in our gold and convertible currency reserves for the two months. I have no doubt that what we have done is wise. Short-term capital movements one way or the other do not add to or detract from the economic strength of the country. The effect of recent movements has been that we have temporarily exchanged obligations to central banks for obligations to a wide variety of other holders of sterling.

BUDGET JUDGMENT

I have weighed up very carefully the various factors. On the one hand, we have spare capacity and present trends of demand do not seem strong enough to ensure of themselves a full enough employment of our resources in the coming year. Our capacity to produce would be rising about as fast as demand.

On the other hand, there is the great uncertainty in any forecast of the main components of demand. And it is likely that action, taken now will produce much of its effect after a lapse of time during which conditions, particularly external conditions, may change quite considerably. Changes in the spending or borrowing habits of the public, for example, can make a big difference to our forecasts. If the public vary by as little as 1 per cent. the proportion of their income they save, the amount involved is £200 million. And in many of the other factors I have mentioned the margin of error in the most careful calculations is large.

It is, therefore, the inevitable conclusion that in trying to reach a decision about the amount of additional demand that can safely be released, we must regard all calculations to which I have referred as no more than pointers; the final decision must be an act of judgment. The conclusion I have reached is that tax concessions in the current year of the order of about £250 million are required to stimulate the economy if we are to realise our target of vigorous expansion without a return to inflation.


But it is not simply a matter of deciding on a sum of money and then devising ways of spending it. The measures themselves are as important as the total. I have, therefore, worked out on this basis a series of measures which are together designed to promote our target of growth without inflation.

EXCHEQUER PROSPECTS 1963–64

To illustrate the consequences of such measures for the Exchequer in the coming year I shall give the Committee first the Exchequer figures for 1963–64 on the basis of the present tax rates.

On the basis of existing taxation, Inland Revenue duties are expected to yield £3,990 million. Customs and Excise duties are estimated at £2,740 million. I expect £160 million from motor vehicle duties and £218 million from other revenue. Total revenue is, therefore, estimated at £7,108 million, or £314 million more than last year's receipts.

Coming to expenditure, the Consolidated Fund services are expected to require £790 million, an increase of £37 million on last year's estimate. The bulk of this increase is on the net provision for National Debt interest: last year there were large interest receipts under the arrangements for winding up the British Transport Commission.

The Estimates of Supply expenditure for 1963–64 total £6,139 million, which is an increase of £527 million, or 9·4 per cent. over last year's Budget Estimate. This is much the largest increase, both in absolute and in proportionate terms, in any year since 1951–52.

The increases are widely spread. They are analysed in the Financial Secretary's Memorandum. The Committee will have noted that grants to local authorities are up by 11·5 per cent., from £950 million to £1,059 million—a not inconsiderable additional contribution to their growing expenditure.

Supply expenditure as a whole is now about the same, as a proportion of gross national product, as it was ten years ago. In the current economic situation, I am able to accommodate this expenditure. But this must not be allowed to obscure the true significance of the present trend of expenditure which arises solely from the working out of existing policies, and poses problems for the future which the

Committee must weigh with great care. Any proposals which involve additional expenditure particularly of a recurrent nature must still be subject to the most stringent tests in the light of the burden already laid on our economy.

This gives a total of £6,929 million for estimated expenditure this year above the line. With total revenue at £7,108 million, there would, on the basis of existing taxation, be a surplus above the line of £179 million compared with last year's estimate of £433 million and a realised surplus of £353 million.

The estimates for below-the-line receipts and payments have been published in the recent White Paper. I need only remind the Committee that net payments are expected to be £597 million, or £178 million more than last year's outturn.

Thus the prospective overall deficit, or net borrowing requirement of the Budget in the coming year, would be £418 million, compared with last year's estimate of £74 million and the actual deficit of £66 million.

The Committee will see reflected in these figures the effect of the measures already taken both to stimulate public expenditure and to reduce taxation. They will also see that tax concessions of the order I have suggested will produce an above-the-line deficit.

SIGNIFICANCE OF THE LINE

It is important that the significance of this should not be misunderstood here or abroad. The line which now divides our Budget accounts is confusing, chiefly because people think that it corresponds with the accounting distinction between current and capital expenditure. My predecessor referred to this in his Budget speeches and I am glad to be able to tell the Committee that soon after the Recess we shall be laying a White Paper on a possible basis for the reform of the Exchequer accounts. It is intended at this stage as a basis for public discussion of this complicated matter.

In the meantime, I would point out that the line divides expenditure not according to its economic character, but according to the nature of the Government's borrowing powers. For below-the-line payments the Government have specific powers to borrow, while if we


think it right to borrow for above-the-line expenditure we must turn, as we shall be doing this year, to our general borrowing powers. In other words the line has significance for our Parliamentary procedures, but none for the impact of the Budget on the economy.

There is rather more significance in the overall deficit. With my proposals this will approach £700 million—a figure which, though large, is less, both absolutely and in relation to the national income, than was budgeted for in 1959. But this figure, though it is the starting point for Exchequer financing and debt management, must not be taken as a measure of the Government's needs from the market in the coming year. As the Committee knows, there are other public funds from which the Exchequer can and does borrow, and other sources, such as National Savings, to which it can turn, before resorting to the market.

The main point is that in framing my Budget I have had to form a view on the probable development of demand in the economy as a whole and have judged that there is likely to be a margin of resources available which can and should be brought into use by tax concessions. Such a judgment must be based on an analysis of the kind I gave the Committee a little while ago; it cannot be done by inspection of the Exchequer figures alone.

INCOMES POLICY

The measures that I now propose to outline are designed to achieve our growth target of 4 per cent. a year without inflation. Clearly, there must be two elements in them: measures designed to increase our productive capacity and our efficiency; and measures designed to ensure that the level of demand is high enough to cause the necessary growth of production, but not so high as to cause a return to inflation.

The key to any judgment upon the level of demand is clearly incomes policy. This simple fact cannot be stated too often; expansion and incomes policy are entirely interdependent. The extent to which I can safely stimulate demand now depends upon the movement of other factors that affect costs and prices: by far the greatest of these is the level of personal incomes.

If we wish to see a more rapid rate of growth, then we must accept the principles and practice of an incomes policy. It is sometimes said that we are facing here the classic problem of the chicken and the egg. Without expansion we cannot have an incomes policy, without an incomes policy we cannot have expansion.

I accept that this is the problem; but we must solve it. I accept that this is the situation; but we must now break out of it. We can break out only by launching deliberately on a policy of expansion and inviting those who have responsibility in management and unions to join with us not only in the prospects, but also in the necessary conditions of a policy of expansion. The country cannot achieve success, nor can "stop-go" policies be avoided, if this compact cannot be made between the three main partners in our economic life.

I will be more specific on the incomes policy. It is true to say that based on experience to date an annual rate of increase of 2 to 2½ per cent. in money incomes is the most that can be expected without outstripping productivity and so putting up prices. The figure appropriate to a 4 per cent. growth rate, as the National Economic Development Office document has illustrated, is about 3 to 3½ per cent. on the average.

Acceptance of the 4 per cent. target involves, therefore, in my judgment, acceptance of the 3 to 3½ per cent. figure for incomes generally. For the nation as a whole the increase of incomes must be no more: it need be no less if we firmly intend together to achieve our target. Acceptance of this fact must be part of a concerted national effort.

EXPORTS

We can see this fact most clearly in the context of exports. The attainment of a 4 per cent. growth rate needs an even greater increase in our exports. This is a formidable task, but I am confident that it will be within the capacity of a vigorously expanding British economy.

I will not deal at length with the problem of exports, or with the various measures of Government assistance to exporters, as the President of the Board


of Trade will speak on this subject tomorrow if he catches your eye, Sir William. But the main conditions of a successful export drive are clearly a general expansion of world trade, an international trading system which gives opportunities for the export of manufactures, and British goods that are competitive in price, quality and date of delivery.

I have already described the large reserves available to sterling, but I shall continue to pursue international agreement on further additions to world liquidity that would not throw undue strain on the key currencies—and I welcome new allies. We will certainly play our full part in the Kennedy round of tariff discussions, to which we attach great importance.

In a world where expanding trade and fair rules of competition present growing opportunities to British exporters, our problem can be solved if we keep our economy competitive and enterprising. The spare capacity now available is such that expansion can take place without diverting goods from exports and, indeed, in many cases—the motor industry is an example—a more buoyant home market should provide a basis for lower unit costs, more competitive export prices, and so for higher exports. Growth, change and stable costs, at which I am aiming in this Budget, are the only recipe for success in expanding our export trade.

MODERNISATION, EFFICIENCY, COSTS—HUMAN PROBLEMS

MANPOWER

I now have to turn to the measures I have to lay before the Committee for promoting our target of 4 per cent. rate of growth. In dealing with the problems of expansion I turn, first, to its human aspect. It is the availability of manpower, and especially of skilled manpower, that sets the limit to our capacity to increase production. We need more skilled men and we need to increase the speed at which men can acquire new skills and tackle new tasks. What we must provide is the facilities for training and the will to use them when provided.

Clearly, this calls for concerted effort by Government, unions and employers: Government to give the lead and to

provide financial and material help; employers to help with the means of training and to give their men the opportunity and a proper reward for the effort involved; and unions to sweep aside restrictions, to encourage men to train and to support more rational wage structures with due allowance for skill.

We will do our part in this. My right hon. Friend the Minister of Labour has put forward comprehensive proposals for the establishment of industrial training boards. I am prepared to see a significant Government contribution to the cost of these which should be added to what is contributed by industry. I have provisionally allocated up to £10 million for this purpose as a start. We will double the facilities in Government training centres and over a half of the increase here is to be in Scotland and the north of England. This will mean extra expenditure on running costs of perhaps £3 million per year and once-and-for-all expenditure of about the same order on equipment. I look to management and to unions to respond to this Government lead.

Next, I turn to the problem of redundancy. Growth, as we know, means change. More rapid growth means more rapid change. As some industries grow, others must contract. But the corollary of this is that the community must treat fairly those whose skills and special training become in consequence no longer required in their former occupations or industries. Proper provision for redundancy is, therefore, of vital importance for economic growth. The problem is complicated, and many possible approaches have been suggested.

For our part, the Government intend to tackle this problem vigorously in consultation with both sides of industry in the next few months, with a view to the publication of proposals and, if necessary, the introduction of legislation in the autumn. I intend, in particular, to examine whether there are any possible changes in the Income Tax system that could help in the establishment of effective redundancy schemes.

For the longer term any Chancellor of the Exchequer is bound to be impressed by the great effort which is being devoted to the expansion of education, upon which our economic strength will depend. Total public expenditure on education in


1963–64 will be about 10 per cent. up on last year and it is moving up towards £1,300 million. Expenditure from public funds on universities, including awards to students, has risen from £36 million in 1952–53 to an estimated level of about £140 million in the coming financial year. This is a formidable figure when related to a university population which is now 117,000, and it represents a remarkable rate of growth. Expenditure on education is the most rapidly developing feature of the whole public outlay.

REGIONAL PROBLEMS

I have been talking of the need to make full use of our national resources of manpower in the economic context. There is one aspect of this problem that is of particular urgency because it has a human as well as an economic significance. I refer to the problem of regional unemployment.

No one can doubt the intense human reasons for making further efforts to cope with the problem of regional unemployment. At the same time, however, the need for progress here should not be underestimated in the context of economic growth. It will not be possible to run this country at its full potential on a steady basis so long as full employment in Scotland and the North-East and Ulster mean overfull employment and serious shortages of labour in the Midlands and the South. The need for further progress with the problems of regional unemployment is, therefore, both social and economic, and the Government have decided on a number of major measures in this field, which I will now explain to the Committee.

First, measures involving further public outlay. The Committee are aware that we have been considering the level of the Government grant to local authorities for expenditure on the clearance and rehabilitation of derelict sites in development districts. At present, the grant is 50 per cent. with a ceiling of 75 per cent. when rate deficiency grant is attracted.

This, clearly, is not enough, and I have decided on increases to 85 per cent. and 95 per cent. respectively for all tenders approved in the next nine months. As a result, I hope that a substantial amount of new work will be undertaken quickly in the development districts of a kind

that will make a lasting and important contribution to the rehabilitation of the districts and thereby to their attractiveness to future industrial expansion.

In Scotland, we have agreed to make a loan to Messrs. Wiggins Teape to finance the construction of an important pulp and paper mill at Fort William. The details will be announced tomorrow by my right hon. Friend the President of the Board of Trade, who will introduce the necessary legislation. The mill will provide a most valuable complement to the work of the Forestry Commission in the area, and I am confident that it will help with the establishment of a thriving community there.

Turning to the North-East, we have decided to make a loan to the Tees Conservancy Commissioners to enable them to complete a major scheme of development known as Lackenby Dock, which will provide valuable additional facilities for ocean-going ships. Details will be announced in due course by my right hon. Friend the Minister of Transport. This is a very necessary part of the plans to strengthen the whole economy of the North-East on which my noble Friend the Lord President of the Council is now engaged.

AID FROM SURPLUS CAPACITY

I announced on 17th December that the Government were prepared to agree to an additional £10 million of aid to under-developed countries, provided that this additional aid could be linked with spare productive capacity in this country. It seemed sensible that we should try to link the needs of the under-developed countries with idle productive resources in this country. The Committee may like to know what success we have had in this attempt.

As was announced on 11th March, the first proposal to come to fruition was the making of a loan to Ghana to cover the cost of two ships to be built in the North-East. The loan was for rather more than £2 million, and the order will give employment to some hundreds of men for about eighteen months.

Since the announcement about ships for Ghana, and indeed within the last few days, further loans have been arranged. We have agreed to make a loan of £3½ million to India, over and above the aid


that we had previously contemplated, to cover the cost of steel plates and other steel products of which the Indians stand in great need both for development and maintenance.

We have also agreed in principle to make a loan of £2 million to Pakistan to buy sugar machinery, and further loans totalling about £2 million to the East African Common Services Organisation for purchase of diesel locomotives and wagon ferries.

Apart from these proposals which have now been successfully arranged, we are considering a number of others; and, in addition, we are trying to ensure, wherever possible, that aid under our existing commitments is linked with surplus capacity.

LOCAL EMPLOYMENT ACT

So much for further public outlay for the benefit of the development districts. I now turn to the question of inducing firms to establish themselves or to expand in these areas.

In my view, the Local Employment Act has shown itself to be an instrument well designed for its purpose and has worked very successfully. I have a certain paternal interest, and I still think it is true. It has been represented from many quarters that it could be made still better—[HON. MEMBERS: "Hear, hear."] that is what I propose to do—if enterprises considering setting up or expanding in development districts could be given in advance some more precise indication of the financial benefits that would be available to them.

The Government have decided to meet this point by introducing standard grants of 25 per cent. of the cost of buildings and 10 per cent. of the cost of plant and machinery. My right hon. Friend the President of the Board of Trade, who will give further details when he speaks tomorrow, intends to introduce amending legislation as soon as possible.

TAX INCENTIVES

The measures will, I am confident, be of great assistance to the development districts. But they are still not enough. I have, therefore, been looking at the question of using the tax system.

The problems involved here, as I am sure the Committee is aware, are very serious, both in principle and in terms of administration. The integrity of our tax system depends very much upon its being fair to all concerned, and upon the avoidance of discrimination. Moreover, special regional rates of, say, Profits Tax or Purchase Tax are, on practical grounds, impossible.

Nevertheless, I have come to the conclusion that it is possible to introduce a system of special tax allowances for plant installed in areas of high unemployment. They will be available not only to incoming firms, but also to existing firms in these areas. They will, therefore, contribute to improving the industrial tone of the districts as a whole and I believe that this is the right way to tackle the problem.

The system I have chosen is one that will allow industrialists to write off their capital equipment at any rate they choose, a system which I will describe as "free depreciation". This is an entirely new departure. For the country as a whole the cost might well be prohibitive. If businessmen generally took advantage of such a provision to write off as much as possible of their new investment in the first year, the cost to the Revenue might run into many hundreds of millions of pounds. But where the areas of high unemployment are concerned, I think that it is right, as I have said in the past, to take risks that could not be justified if they were applied throughout the whole country.

I therefore propose to introduce in the areas of high unemployment this system of free depreciation for new plant and machinery.

The effect can be summarised in this way. The businessman making an investment in these qualifying areas can write off for tax purposes the expenditure he incurs after today on new plant and machinery at any rate he chooses. He need not, therefore, pay a penny piece of taxation until he has written off his entire investment in new plant and machinery, plus the 30 per cent. investment allowance. It seems to me that this should be a very formidable incentive indeed to investment in these districts.

Because it is so formidable, some special considerations arise. I shall have


to define both the limits of the plant involved and the areas involved very carefully. The scheme will only apply to new plant and machinery used in productive industry, not to that used in distributive trades or in services. It will not apply to mobile items, such as lorries that can be readily moved to another area. If plant and machinery which is allowed to qualify is moved elsewhere, then the extra allowances will have to be recouped.

The cost this year will be negligible, but it may be about £25 million next year and might rise to a maximum of £45 million in 1966–67.

For the areas, I propose to take the development districts in Great Britain, as they now stand, and the whole of Northern Ireland. The principle of "free depreciation" is not the same as that of the assistance under the Local Employment Act. One is to encourage the expansion and modernisation of plant by all industrial undertakings in or coming to the area; the other is to encourage specific projects to provide employment. I regard these principles not as overlapping, but as complementary.

It seems logical to use the same districts for "free depreciation" as for the Local Employment Act. When an area is scheduled as a development district, all industrial firms in the area will become eligible for "free depreciation"; and when the area ceases to be a development district new purchases of plant and machinery will no longer be eligible for "free depreciation".

I must emphasise that the combination of this tax incentive and the new standard benefits will provide great advantages for any firm in a development district or moving to one. The greater the assistance given to special districts, the greater will be the differentiation between those inside and those just outside the boundary. This is inevitable. But if the scheme is to succeed the boundaries must be clearly established and then firmly accepted, and I invite the co-operation of the Committee in meeting this necessary condition.

By this combination of new measures—the further public outlay on capital works, the new standard benefits to be announced in detail tomorrow, and this new, and I think revolutionary, principle of tax

Incentive—we are making a series of major moves to tackle the problem of local employment. The extent and nature of our decisions shows clearly our determination to solve this problem, and our appreciation of its importance, both for the society and for the economy of the country.

MODERNISATION, EFFICIENCY, COSTS—INDUSTRIAL PROBLEMS

I have been dealing with the human element in a growth programme. I turn now to some of the problems of a more industrial character: the basic industries and the need for private industry to invest, to export, and to increase efficiency.

TRANSPORT

First, two basic industries and services—transport and energy.

I would emphasise to the Committee the importance of Dr. Beeching's proposals for the rationalisation of the freight services, with the great potentialities of lower transport costs which these present, and the elimination of clearly uneconomic passenger services. This is important to the Exchequer, for it is the practical route to a great reduction in the bill for transport subsidies, which is now nearly £150 million. But it is crucial for industry, and to the growth of the national economy.

In another sector of the transport industry much in need of modernisation, the ports, my right hon. Friend the Minister of Transport has announced the Government's intention to proceed on the lines proposed by the Rochdale Committee.

On roads, the Government's long-term programme is pushing ahead, and the Vote is up by £21 million to £172 million.

ENERGY

Turning to energy, the electricity industry's investment will increase this year by £114 million. The gas industry is in a period of technological transformation, and its investment is up by £13 million. These developments are reflected in a large increase in Exchequer advances. Provided that these industries are achieving their agreed financial objectives, I regard these Exchequer advances as the equivalent in nationalised industry of the


increase in capital of profitable and expanding private industrial undertakings. In other words, they are a necessary part of economic growth.

The powers to make Exchequer advances to the gas and electricity industries expire at the end of August, and I shall be moving a special procedure Resolution to enable these powers to be renewed in the Finance Bill.

I turn now to coal, which provides about 70 per cent. of our energy supplies—and its share in the fuelling of British industry is even greater. Coal prices will be the main element in our fuel costs for many years to come. Last July, my right hon. Friend the Minister of Power announced the Coal Board's policies for reshaping the industry and making it competitive. The Committee will recall that for the five years up to 1962 the industry incurred losses and in 1961 we had to legislate to provide temporarily for deficit financing.

The new policies are proving effective. Last year, there was a record improvement in productivity, which increased by about 8 per cent., and a fall in total costs of production per ton. Proceeds per ton of coal sold are falling, partly as a result of the changing pattern of sales and partly as a result of more competitive selling which the new circumstances make possible. In 1962, the industry made a small profit, and Lord Robens tells me that this year it has a very good prospect of achieving its financial target.

Against this background I considered whether to reduce the duty on fuel oil. I have been pressed to remove this duty to lower industrial costs. I cannot consider this solely from a revenue point of view, but must take into account the widest long-term economic interests.

To remove the duty now would change the terms of competition against coal and in favour of oil. This would help certain industries, notably cement, steel and parts of the chemical industry, which are heavy users of fuel oil. The Coal Board would no doubt try to meet the extra competition and to compensate itself by raising other prices wherever it could do so commercially. And I am sure that we should have to accept the prospect that the industry would be pushed back into deficit, and that we should need to legislate again to give financial assistance.

The public would have to pay, either as consumer or as taxpayer. Even more seriously, the setback to the industry would inevitably undermine its growing confidence and threaten to disrupt the plan for redeployment of manpower and to frustrate the policies upon which we and the Board are relying for the future.

I have to decide whether the quick reductions in the costs of certain industries which would result from the removal of the duty would outweigh both the immediate damage to the coal industry and the risk of disrupting and even preventing the long-term recovery of the full competitive efficiency of the industry. The issue is not between a policy which reduces costs to industry and one that does not. If the duty is left unchanged this year, Lord Robens is confident that, with production costs continuing to fall, he will be able to make price reductions to certain sections of consumers during 1963.

My judgment is that the decisive consideration from the national point of view is that of the long-term competitive power of the coal industry. I have, therefore, decided that the time is not yet ripe to reduce the duty.

INDUSTRIAL LIGHT OILS

There is one other aspect of oil duty, that on light oils used as raw materials, or as solvents or preservatives, or for similar purposes, in industrial processes, The duty of 2s. 9d. a gallon on industrial light oils imposes a special additional burden on a number of industries which happen to use oil in the actual manufacture of their products, one which many of their overseas competitors do not have to carry. I accept in principle the claim for some form of duty relief for industrial light oils. I do not propose, however, to ask the Committee to agree to a Resolution on this subject today, because the method of giving relief requires further consideration.

Customs and Excise will at once begin discussions about this with the industries concerned and with the oil companies. They are bound to be technical and complex; but rather than proceed in a piecemeal way, I would prefer to deal with the case for relief as a whole, and I see no reason why legislation which substantially meets the case should not be introduced next year.

This relief will represent a useful reduction in costs in a number of industrial processes. When fully operative it is expected to reduce the burden on costs of production by up to £10 million a year.

I also propose to make certain minor improvements in the administration of the duties on hydrocarbon oils, to take account of technical developments.

MANUFACTURING INDUSTRY

I turn now to manufacturing industry generally. For a programme of more rapid growth two things are needed: first, a higher level of investment; and, secondly, a better use of our resources, both present and future. I think that there is sometimes a tendency to overestimate the relative importance of the first and underestimate the possibilities of the second. The amount that could be achieved, and achieved rapidly, by better management and better deployment of our resources, and more rapid use of modern techniques may be very much larger than at present we suspect. But here responsibility must rest very much upon management and unions: management to search out new machinery and new methods, labour to encourage their introduction.

The responsibility of the Government lies particularly in the field of encouraging investment, both by making it more profitable to invest and by helping to ensure the flow of funds for investment. In this field, the Government are doing, and will do, their part, as I intend to demonstrate, and we shall look to management and labour to do their part, also.

CAPITAL ALLOWANCES

I announced last November major improvements in the capital allowances designed to encourage new investment in industry. The Finance Bill will put these into effect. They include, as the Committee is aware, increases in the investment allowances, substantial acceleration of the annual allowances for heavy plant, and a new tax deal for scientific research. For technical reasons this last item has a separate Resolution.

Taken together, these increased investment allowances and the new minimum rate of 15 per cent. for plant and

machinery will be of immense benefit to British industry. The depreciation allowances now available to British industry compare favourably with any of their competitors in the Western world. Effectively, 100 per cent. of the cost of plant and machinery can be written off in seven years and then there is still 30 per cent. to come.

In addition to these changes, which I announced last November, I propose now to make some further improvements. I will simplify the depreciation code by fixing only two higher annual rates for new plant and machinery, namely, 20 per cent. and 25 per cent., according to the expected life. Where plant already qualifies for more than 25 per cent, the existing higher rate will be preserved. This will both improve and simplify the position so far as plant and machinery is concerned.

Turning to new industrial buildings and structures, it has been represented to me that the present system of a 2 per cent. annual allowance corresponding to an assumed life of 50 years is unrealistic. I accept this argument and I propose, therefore, as regards expenditure on new industrial buildings becoming due and payable after 5th November last year, to double the annual rate from 2 per cent. to 4 per cent.

The cost to the Exchequer of all these changes is only £11 million this year, but it will rise to about £130 million by 1966–67. This is the measure of their importance to British industry.

STAMP DUTY

It is one thing to encourage the investment of capital by increased capital allowances. The other side of the coin—perhaps equally important—is to encourage the provision of the savings to finance this investment. It is also essential to remove the existing disabilities to increasing our invisible earnings.

The Stamp Duty on stock transfers and on house conveyances was doubled in 1947. I am convinced that this was a mistake. The 2 per cent. rate of duty is substantially higher than in any other country in Europe or North America and has many unfortunate effects. It drives business, and therefore invisible earnings, from London. It is a strong


disincentive to investment in Britain by people in other countries. It discourages investment in productive industry, not least by the small investor. It tends to raise the cost of issuing capital.

And in the field of house property, despite various reliefs given in the past especially for purchase of small houses, Stamp Duty certainly increases the cost of buying a house, obtaining a mortgage, or buying a lease, and so adds to the difficulties of moving from place to place and from job to job. I am, therefore, satisfied that this level of Stamp Duty is a disincentive to increasing our invisible income, an obstacle to growth and a hindrance to the full development of our economy.

I therefore propose to restore the duty on transfers and conveyances to the original level of 1 per cent. I also propose to raise the exemption from Stamp Duty for house purchase from £3,500 to £4,500. A number of other duties which were doubled in 1947 will also be halved, for example, the duties on mortgages and leases. Full details will be given in the White Paper.

I propose to make changes in the rules affecting bearer securities to help to improve our invisible earnings. These securities have always been attractive to foreign investors. I intend to remove the ban on them that at present exists under the Exchange Control Act, and to take other necessary measures such as restoration of the right to exchange Government stock into bearer where this right originally existed.

As a result of the reduction I have just announced in the transfer duty, the existing rates on bearer securities of 6 per cent. and 4 per cent. will be reduced to 3 per cent. and 2 per cent.

I propose, at the same time, to deal with a number of anomalies in this field. In particular, provision will be made in the Finance Bill to alter the existing basis for the calculation of duty on bearer from nominal to market value. Without this change it would be very profitable to convert into bearer form registered securities whose market value is well in excess of nominal value. By changing the law I shall prevent the loss of revenue, and, at the same time, avoid giving an encouragement of an artificial character to the conversion of registered into bearer securities.

The cost of all these Stamp Duty changes, which will take effect from 1st August, will be about £27 million in the current year and £40 million in a full year.

INCOME TAX CHANGES

I have now described a series of measures designed to remove obstacles to growth and to encourage the development of our national resources, both human and material. These are the foundations of long-term growth. The cost of all the tax changes I have so far announced amounts to £83 million this year. On the Budget judgment that I explained to the Committee, this clearly leaves room for a further large impetus to demand this year to take up the existing slack in the economy.

I have decided to concentrate this further relief in the field of direct taxation, as this is the method best calculated both to stimulate the economy and to encourage individual effort. At the same time, in view of the importance of incomes policy to our plans for expansion without inflation, I have framed the reductions in such a way as to spread the benefits as evenly as possible over the whole range of incomes, while giving particular attention to those with family responsibilities or other special claims.

The reliefs will be concentrated on individuals. Companies will gain a great deal from the capital allowances I have already described; indeed, the annual benefit to companies will rise over the next four years to as much as £165 million a year. I do not think that the rate to which the tax on company profits has been reduced is generally understood. People often talk as if all companies actually paid a rate of nearly 54 per cent. of their commercial profits. But, in fact, no industrial company could pay tax at such a rate unless it failed to buy a single piece of new equipment in the course of a year for any purpose, including replacement. The effect of the investment allowances is that the average rate of taxation on industrial profits will not now exceed 48 per cent.

Taxpayers who, quite recently, were subject to Surtax on earned income beginning at a little over £2,000, have just benefited, and in my opinion rightly,


from the substantial reduction in Surtax made by my predecessor.

The increases in social service benefits that are now becoming effective represent for their recipients one of the biggest improvements ever made.

In these circumstances, I conclude that this year the purposes of economic expansion and, in particular, the essential needs of incomes policy can best be served by a series of changes in the Income Tax structure involving the allowances and the reduced rates of tax. By this method I can distribute the benefit as widely as possible. Of any reduction in the standard rate, 32 per cent. would go to companies. So far as individuals are concerned, the standard rate has become something of a misnomer. With the present allowance for earned income no one pays tax at 7s. 9d. in the £ on any earnings under £5,000. For the family man with two children the effective overall rate of tax on earnings—including both Income Tax and Surtax—does not reach 7s. 9d. until he is making £10,000 a year.

The changes I shall explain to the Committee will involve remissions of £186 million this year and £240 million in a full year, 42 per cent. of which will accrue to those earning below £1,000 a year and 50 per cent. to those earning between £1,000 and £2,000 a year. While, in most cases, the benefit in absolute terms will be higher at higher levels of income, which is both inevitable and just with any reduction of direct taxation, proportionately the benefits that I will propose will be greatest in the lower ranges of income.

NATIONAL INSURANCE CONTRIBUTIONS

First, one change that is the consequence of recent legislation. National Insurance contributions are soon to be increased, and I propose to raise the fiat standard adult employees allowance from £18 to £22 to take account of the pension element in the increase. All adult employees, other than women who have opted not to pay their insurance contributions, will get an increased allowance of £4 and there will be appropriate increases for the other classes affected. As so many people are involved, these changes will cost no less than £19 million this year and £24 million in a full year.

AGE EXEMPTION

At present, a single person aged 65 or over is exempt from Income Tax if his income does not exceed £300 and a married couple of whom one is 65 or over are exempt up to an income of £480. I propose that these limits shall be increased to £325 for single persons and £520 for married couples.

AGE RELIEF

Age relief applies where the taxpayer or his wife is aged 65 or over and his total income is not more than £800 and it gives the equivalent of earned income relief to investment income. I think that it is appropriate to extend this relief for elderly persons with modest investment incomes, and I propose that the income limit for age relief shall be increased from £800 to £900.

Mr. Callaghan: I proposed this last year, when the right hon. Gentleman voted against it.

Mr. Maudling: I am glad that the hon. Member approves of this change.
I may add for the benefit of the hon. Gentleman, who so kindly intervened, that £900 a year at current rates of interest on National Savings represents an investment of £20,000.

SMALL INCOME RELIEF

The small income relief similarly gives the equivalent of earned income relief to investment income if the taxpayer is under 65 and his total income does not exceed £400. I propose that it shall go up from £400 to £450.

INCOME TAX GRADUATION

I turn now to the general range of Income Tax payers. I think that my main effort should be directed to improving the position of married people, particularly those with children.

First, some changes at the bottom of the Income Tax scale. At present, the starting point for liability to Income Tax is about £200 for a single person and £330 for a married couple without children, that is, nearly £4 a week and £6 10s. a week respectively. That seems to be too low under modern conditions. For example, no one would wish to tax the war


widow of a private soldier who, under the new arrangements, will receive £234 a year.

To raise the starting point simply by making sizeable increases in the single and married allowances would be very expensive and would distort the pattern of relief which should be given. I propose, therefore, to couple increases in these allowances with adjustments in the present reduced rate bands.

The effect of the present reduced rates is that the first £60 of taxable income is taxed at 1s. 9d. in the £ and then there are two bands of £150 each taxed at 4s. 3d. and 6s. 3d. respectively. It is only after paying tax on the first £360 of taxable income that the standard rate applies.

My proposal for raising the starting point and giving some relief higher up is to abolish the 1s. 9d. band. In place of the present 4s. 3d. and 6s. 3d. bands I propose to substitute one of £100 at 4s. and one of £200 at 6s. The abolition of the lowest band will be effected by raising single and married allowances by £60. The effect of this and of the alterations in the reduced rate bands is that those who pay only at 1s. 9d. in the £ will cease to pay at all. But the full benefit will not be carried all the way up the scale.

The proposals I have just described will absorb rather less than half of the sum I mentioned. The major part I propose to devote to improving the relative position of families by increasing by £20 the difference between the single and the married allowances and by raising all the child allowances by £15. There will also be an increase in the child income limit from its present figure of £100 to £115.

I should now summarise the changes which I have outlined. I propose that the single allowance should go up by £60 from £140 to £200, the married allowance by £80 from £240 to £320 and that all the child allowances should be increased by £15. The 1s. 9d. reduced rate disappears and the three reduced rates are replaced by one of 4s. on £100 and one of 6s. on the next £200.

The effect of my proposals as a whole is to give relief to all existing Income Tax payers on a scale that proportionately gives greatest benefit at the lower levels. As incomes rise the benefits become greater for the family man, which, I

believe, will generally be regarded as right. I will give some practical examples of the effect of these proposals.

At the average level of earnings of the ordinary man in employment, now £840, the effect will be a benefit for a single man of £5 11s., for a married man with no children £13 6s. and for a married man with two small children £17 15s.

For a married man with two small children, at £700 a year, his present tax of £10 17s. is abolished; at £800 a year it falls from £27 8s. to £10 1s.; at £1,000 from £71 9s. to £51 15s.; and at £1,500 from £219 0s. to £194 0s. At £20,000 a year, and at present rates of Surtax, the full benefit in 1964–65 will be £51 19s.

A reduction of 3d. in the standard rate would have given the married man with two small children no benefit at all at £1,000 a year and only about £4 at £1,500 a year.

Full details are available in the Financial Statement. It will be seen from this that there will also be some relief for investment income, which as a result of the improvement in small income relief will be most valuable around the level of £500 a year investment income.

The effect of all my proposals is to exempt from tax about 3¾ million people.

All these changes will involve the preparation of new P.A.Y.E. tax tables and the Inland Revenue will have to do a lot of work in recoding tax payers for P.A.Y.E. The new scale of allowances and reliefs will be brought into operation for P.A.Y.E. on the first pay day after 5th July.

SUMMARY

In total, the changes in taxation I have announced will reduce revenue receipts by £269 million in 1963–64. Before Budget changes the accounts, as I have explained, show a surplus above the line of £179 million. The tax changes which I propose will, therefore, convert this into a deficit of £90 million. The net borrowing requirement will be increased from £418 million to £687 million.

BUDGET RESOLUTIONS

As the Committee is now receiving the Resolutions, I should like to mention a small change that I am making


this year. In the past, what is known as the Incidental Charges Resolution has listed in more or less detail the proposals for tax concessions that might create an incidental charge. This practice has had the effect of ruling out of order further proposals not mentioned in the Resolution if they were judged to impose, in exceptional circumstances, an incidental charge.
The examination of Amendments to the Finance Bill to decide whether or not they imposed an incidental charge occupied a good deal of time, and as we all remember, would-be movers of Amendments and new Clauses have often felt frustrated by technicalities which had not been foreseen. This year, I am asking the Committee to approve an Incidental Charges Resolution that covers any provision designed in general to afford relief from taxation, and I hope that this change will be welcomed as a useful simplification of our procedures.

As I said at the beginning, the proposals I have laid before the Committee this afternoon are designed to achieve our purpose of expansion without inflation. They are designed to do the share of the Government in achieving the target of a 4 per cent. annual rate of growth. I have framed my proposals in a rather unusual form because I wished to put them forward as a coherent unit with each individual change finding its logical place in the whole picture. I hope that I have succeeded.

I end by impressing, once again, that Government policy alone cannot ensure success. There is need for a common effort led by Government, management and unions. I think that I can claim that today we are doing the Government's share. That has been my purpose.

1. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES

Motion made,

That the period after which orders under section 9 of the Finance Act, 1961, may not be made or continue in force shall be extended till the end of August 1964.—[Mr. Maudling.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. SPIRITS (CUSTOMS)

Motion made, and Question,

That as from 4th April 1963 the duties of customs chargeable on imported spirits other than perfumed spirits shall in the case of spirits of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged as if the rates specified in Table I in Schedule 1 to the Finance Act 1962 were amended—

(a) by substituting a rate of £15 13s. 8d. for the rate of £15 15s. 4d. (the rate per gallon for liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested); and
(b) by substituting a rate of £11 12s. 3d. for the rate of £11 13s. 6d. (the rate per proof gallon for other imported spirits not being perfumed spirits).

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

3. BEER (CUSTOMS)

Motion made, and Question,

That as from 4th April 1963 the duties of customs and drawbacks of those duties chargeable or allowable on beer (other than black beer of an original gravity of 1200 degrees or more) shall in the case of beer of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged or allowed as if the rates specified in Schedule 2 to the Finance Act 1962 were amended—
(a) by substituting a rate of £6 3s. 5d. for the rate of £6 13s. 5d. (the rate of duty per 36 gallons); and
(b) by substituting a rate of £6 3s. 2d. for the rate of £6 13s. 2d. (the rate of drawback per 36 gallons).

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

4. TOBACCO (CUSTOMS)

Motion made, and Question,

That as from 4th April 1963 the duties of customs chargeable on tobacco (other than unmanufactured tobacco) shall in the case of tobacco of Convention area origin (within the meaning of the European Free Trade Association Act 1960) be charged as if the rates per


pound specified in Table I in Schedule 4 to the Finance Act 1962 were amended by substituting for a rate specified in the second column of the following Table the corresponding rate specified in the third column thereof.

TABLE


Description of Tobacco
Present Convention rate (per pound)
New Convention rate (per pound)



£
s.
d.
£
s.
d.


Tobacco manufactured, viz.—








Cigars
3
19
4
3
17
10⅛


Cigarettes
3
15
2½
3
14
0


Cavendish or Negrohead
3
14
3
3
13
1½


Other manufactured tobacco (not being Cavendish or Negro-head manufactured in bond)
3
12
8
3
11
8


Snuff and snuff work (including tobacco dust or powder and ground tobacco)—








Containing more than 13 lbs. of moisture in every 100 lbs. weight thereof
3
11
11½
3
11
0⅜


Containing not more than 13 lbs. of moisture in every 100 lbs. weight thereof
3
14
3
3
13
1½

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

5. MECHANICAL LIGHTERS (CUSTOMS)

Motion made, and Question,

That as from 4th April, 1963, the duty of customs charged on mechanical lighters by section 6 of the Finance Act, 1928, shall in the case of mechanical lighters of Convention area origin (within the meaning of the European Free Trade Association Act, 1960) be charged at the rate of 6s. 0d. or, in the case of a gas lighter, at the rate of 4s. 0d.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]

put and agreed to.

6. MATCHES (CUSTOMS AND EXCISE)

Motion made and Question,

That—
(a) as from 4th April, 1963, the duties of customs charged on matches by section 4 of the Finance Act, 1951, shall in the case of matches of Convention area origin (within the meaning of the Euro-

pean Free Trade Association Act, 1960) be charged at rates equal to the rates of duties of excise charged on matches by that section; and
(b) as from 1st September, 1963, the duties of customs and excise charged on matches by that section shall be charged at the same rates for matches in containers holding not more than 30 matches as are charged by that section for matches in containers holding more than 30 matches; and
(c) as from 1st September, 1963, the duties of excise charged on matches by that section shall, instead of being charged on matches manufactured in the United Kingdom, be charged on matches sent out from the premises of a manufacturer of matches.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]

put and agreed to.

7. CUSTOMS AND EXCISE (GOODS CONVEYED BY PIPE-LINE)

Motion made, and Question,

That provision shall be made for securing that, in certain cases where goods chargeable with a duty of customs or excise are conveyed by a pipe-line, the duty shall be paid by the owner of the line.—[Mr. Maudling.]

put and agreed to.

8. INCOME TAX (CHARGE AND RATES FOR 1963–64)

Motion made, and Question,

That income tax for the year 1963–64 shall he charged at the standard rate of 7s. 9d. in the pound, and, in the case of an individual whose total income exceeds £2,000, at such higher rates in respect of the excess as Parliament may hereafter determine.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]

put and agreed to.

9. INCOME TAX (SURTAX RATES FOR 1962–63)

Motion made, and Question,

That income tax for the year 1962–63 shall be charged, in the case of an individual whose total income exceeded £2,000, at the same higher rates in respect of the excess as were charged for the year 1961–62.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Maudling.]

put and agreed to.

10. INCOME TAX (PERSONAL ETC. RELIEFS)

Motion made, and Question,

That—
(a) the personal reliefs under section 210 of the Income Tax Act 1952 be increased by substituting £320 for £240 in subsection (1) (a) (married) and £200 for £140 in subsection (1) (b) (single), and in subsection (2) (wife's earned income relief) for £140 there be substituted £200;
(b) in section 211 (2) and (3) of that Act for £800 (maximum income qualifying for full old age relief) there be substituted £900;
(c) the child allowance under section 212 of that Act be increased by substituting £165, £140 and £115 respectively for the amounts of £150 (children over sixteen), £125 (children between eleven and sixteen), and £100 (children not over eleven) in subsection (1A), and the £100 specified in subsection (4) (maximum income of child if claimant not to be disqualified for relief) be increased to £115;
(d) the amounts of £230 and £155 (total income of dependent' relative) specified for the purposes of section 216 of the said Act be each increased by £25;
(e) the following Table be substituted for the Table set out in section 220 (1) of the said Act (reduced rate relief):—

TABLE


Where the relevant amount—


does not exceed £100
a deduction equal to 3s. 9d. for each pound of the relevant amount.


does exceed £100, but does not exceed £300
the same deduction as if the relevant amount were £100, plus 1s. 9d. for each pound of the relevant amount in excess of £100.


exceeds £300
the same deduction as if the relevant amount were £300;

(f) in section 15 of the Finance Act 1952 (small income relief) for £400 in subsection (1) (maximum income for full relief) and in subsection (2) (marginal relief) there be substituted £450, and for £550 (limit for marginal relief) in subsection (2) there be substituted £680;

(g) in section 13 of the Finance Act 1957 (relief for persons over sixty-five with small incomes) subsection (1) (a) (i) be amended by substituting for £300 (maximum iincome for full relief to a single man) £325, subsection (1) (a) (ii) be amended by substituting for £480 (maximum income for full relief to a married man) £520, and subsection (1) (b) (marginal relief) be amended correspondingly;

(h) Schedule 3 to the Finance Act 1960 (relief for National Insurance contributions) be amended by increasing—
(i) the amount specified in paragraphs 1, 3 (a) and 5 (a) of the Table set out in Part I of the Schedule by £4,

(ii) the amounts specified in paragraphs 3 (b) and 5 (b) of the Table by £3.
(iii) the remaining amounts specified in the Table by £2, and
(iv) each of the amounts of £5 specified in paragraph 2 of Part II to the Schedule by £2;

Provided that the amounts of tax deductible or repayable under section 157 (pay as you earn) of the Income Tax Act 1952 before 6th July, 1963, shall be the same as if no such changes had been made as are above provided, but this provision shall not prevent the resulting over deductions and under repayments from being adjusted subsequently by means of diminished deductions or increased repayments under that section or, if need be, by an assessment.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

11. INCOME TAX (PAY AS YOU EARN: ALTERATIONS CONNECTED WITH EXONERATION OF OWNER-OCCUPIERS FROM SCHEDULE A)

Motion made, and Question,

That, in connection with the removal from the charge to income tax of the occupier's beneficial interest in land in the United Kingdom, the necessary consequential alterations be made in the amounts of tax deductible or repayable under section 157 (pay as you earn) of the Income Tax Act 1952:

Provided that the amounts of tax so deductible or repayable before 6th July 1963 shall be the same as if no alterations had been required, the alterations being made by adjusting subsequent deductions or repayments or, if need be, by an assessment.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

12. INCOME TAX (MISCELLANEOUS PRO VISIONS CONNECTED WITH EXONERA TION OF OWNER-OCCUPIERS FROM SCHEDULE A, AND OTHER PROVISIONS RELATING TO LAND)

Motion made, and Question,

That it is expedient to authorise such charges to income tax as arise from provisions connected with the removal from the charge to tax of the occupier's beneficial interest in land in the United Kingdom and other provisions relating to land, and in particular from—
(a) the restriction of claims under section 101 of the Income Tax Act 1952 (maintenance claims);


(b) provision in respect of the payment of premiums and of other transactions relevant to the amount of rent, or which can be carried out as an alternative to the charging of premiums or the letting of land, and for extending in relation to transactions in land the provisions of Chapter IV of Part XVIII of the said Act of 1952;
(c) provision for the collection of outstanding tax under Schedule A;
(d) provision as to woodlands;
(e) the disallowance of deductions in respect of the annual value of land occupied for the purposes of a trade, profession or vocation, and amendments as to what amounts are to be treated as consideration for the grant of a tenancy, and what as rent, in computing the profits or gains of a trade of dealing in land.—[Mr. Maudling.]

put and agreed to.

13. INCOME TAX (QUARRIES OF SAND OR GRAVEL ETC.)

Motion made, and Question,

That, so long as tax is chargeable under Schedule A, the concerns specified in the proviso to paragraph 1 of Schedule A (mining and other concerns the profits of which are charged under Case I of Schedule D) shall include quarries of sand or gravel, sandpits, gravelpits and brickfields.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

14. INCOME TAX (SCIENTIFIC RESEARCH ALLOWANCES)

Motion made, and Question,

That it is expedient to amend the provisions applying on the sale or destruction of an asset in respect of which a deduction has been made under Section 336 of the Income Tax Act 1952 in charging the profits or gains of a trade.—[Mr. Maudling.]

put and agreed to.

15. INCOME TAX (CAPITAL ALLOWANCES, ETC., FOR VEHICLES)

Motion made, and Question,

That it is expedient to amend the provisions of Sections 23 to 27 of the Finance Act 1961.—[Mr. Maudling.]

put and agreed to.

16. INCOME TAX (CO-OPERATIVE HOUSING ASSOCIATIONS)

Motion made, and Question,

That interest and other annual payments falling within Section 177 of the Income Tax Act 1952 (payments payable subject to deduction of tax) which are payable by certain

approved housing associations be treated for tax purposes as payable severally by the member in specified proportions.—[Mr. Maudling.]

put and agreed to.

17. INCOME TAX (PREMISES PROVIDED FOR HOLDERS OF OFFICES OR EMPLOYMENTS)

Motion made, and Question,

That provision be made for including in emoluments chargeable under Schedule F. an amount in respect of premises occupied by, or by the wife or husband of, the holder of an office or employment (including any person who is a director within the meaning of Section 163 (1) of the Income Tax Act 1952) at no rent or a rent less than the annual value.—[Mr. Maudling.]

put and agreed to.

18. INCOME TAX (DISCONTINUANCE OF TRADES, ETC.)

Motion made, and Question.

That where a trade, profession or vocation is permanently discontinued in 1964–65 or any subsequent year of assessment income tax for the two years of assessment immediately preceding shall in certain cases be charged by reference to the profits or gains of those years, and the provisions of the Income Tax Acts relating to the charging of tax where there is a discontinuance shall be amended accordingly.—[Mr. Maudling.]

put and agreed to.

19. INCOME TAX (DIVIDENDS ON BONDS TO BEARER)

Motion made, and Question,

That profits arising from certain public revenue dividends mentioned in Schedule C, being dividends paid by means of coupons in respect of bonds or certificates to hearer, be charged under the relevant paragraph of that Schedule, and not under Case III of Schedule D, whatever the amount of the half-yearly payments.—[Mr. Maudling.]

put and agreed to.

20. INCOME TAX (INDIA, PAKISTAN AND BURMA PENSIONS)

Motion made, and Question,

That the exemption from Income Tax conferred by Section 40 (1) of the Finance Act 1956 in respect of a pension which is paid under the authority of the Pensions (India Pakistan and Burma) Act 1955 shall not apply to so much of any such pension as is paid by virtue of the application to the pension of the Pensions (Increase) Act 1959 or the Pensions (Increase) Act 1962.

And it is hereby declared that it is expedient in the public interest that this Resolution


should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1913.—[Mr. Maudling.]

put and agreed to.

21. GIFTS IN CONSIDERATION OF MARRIAGE (ESTATE DUTY AND STAMP DUTIES)

Motion made, and Question,

That provision be made, for the purposes of estate duty and stamp duties, for restricting the exemption from duty of gifts made in consideration of marriage and for treating dispositions made on or in contemplation of marriage by either of the parties thereto as gifts.—[Mr. Maudling.]

put and agreed to.

22. ESTATE DUTY (VALUATION BY REFERENCE TO SCHEDULE A VALUE OF LAND).

Motion made, and Question,

That any provision of the enactments relating to estate duty which provides for any value to be restricted by reference to the annual value of land for purposes of income tax under Schedule A shall cease to have effect.—[Mr. Maudling.]

put and agreed to.

23. STAMP DUTIES (SECURITIES FOR ANNUITIES ETC.)

Motion made, and Question,

That further provision he made with respect to the stamp duty chargeable on securities for annuities or sums of money at stated periods or for the payment or repayment of money.—[Mr. Maudling.]

put and agreed to.

24. STAMP DUTIES (MARKETABLE SECURITIES ETC.)

Motion made, and Question,

That further provision be made with respect to the stamp duties chargeable in respect of, or on the transfer of,—
(a) marketable securities;
(b) share warrants, stock certificates to bearer, instruments to which section 6 of the Finance Act 1899 applies and other similar certificates and instruments;
(c) securities and stock of Commonwealth governments;
and that section 44 of the Finance Act 1944 be repealed.—[Mr. Maudling.]

put and agreed to.

25. STAMP DUTIES (LEASES)

Motion made, and Question,

That it is expedient to authorise charges to stamp duty arising from—
(a) any provision for treating as a lease for a definite term any lease granted for a

fixed term and thereafter until determined, and for construing section 75 of the Stamp Act 1891 accordingly;
(b) any provision relating to the duty chargeable under paragraph (2) (a) of the heading "Lease or Tack" in Schedule 1 to that Act.—[Mr. Maudling.]

put and agreed to.

26. INCIDENTAL AND CONSEQUENTIAL CHARGES (INCOME TAX, ESTATE DUTY AND STAMP DUTIES).

Motion made, and Question,

That it is expedient to authorise any incidental or consequential charges to income tax, estate duty or stamp duties which may arise from provisions designed in general to afford relief from taxation.—[Mr. Maudling.]

put and agreed to.

27. PROFITS TAX (MISCELLANEOUS CHARGES)

Motion made, and Question,

That it is expedient to authorise charges to the profits tax which arise from provisions for that tax corresponding with amendments of the law relating to income tax or are incidental to or consequential on such amendments.—[Mr. Maudling.]

put and agreed to.

28. REDEMPTION OF GUARANTEED LAND STOCK

Motion made, and Question,

That, in connection with the redemption of any stock created under the Purchase of Land (Ireland) Act 1891, any part of the Sinking Fund established under that Act which is not applied in the redemption of the stock may be paid into the Exchequer.—[Mr. Maudling.]

put and agreed to.

29. AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.—[Mr. Maudling.]

5.22 p.m.

Mr. Harold Wilson: It is traditional that the first speech after the moving of the Budget Resolutions should be devoted to the courtesy of congratulating the Chancellor on the manner in which he has presented his Budget to the Committee. I think I can certainly say today that this is no empty ceremony.


Quite apart from the contents, on which I shall have a word or two to say in a moment, the whole Committee will agree in complimenting the Chancellor on the very clear way in which he presented the Budget and held the attention of the Committee throughout.
I was perhaps in a better position than many to test him on this—if I may be permitted a personal note—having not been to bed all night and having had very little sleep. If the Chancellor's speech had been a little dull, even for a little time, while he was addressing us, I would have gone off to sleep, but I can say that I gave my full attention to the Chancellor and he held the full attention of everyone in the Committee.
I think the breach of precedent which he said he would make, the departure from traditional policy, was in general for the convenience of the Committee. Although we may want to think about it a little in future, I believe that in general the Committee preferred this to the lengthy exercise of putting time on until the markets had closed and then giving us all the real proposals the Chancellor is to make, all the guts of his proposals, in a mad rush at the end in a way in which the Committee cannot properly absorb. I think the change was right. Some of his minor tax reliefs obviously will be welcomed, and also his statement that we are to have a White Paper dealing with a new form of Budget accounts. I think the Chancellor is quite right to be doing that.
The Chancellor told us that the theme of his Budget is expansion. We welcome those words from him, that the theme is expansion. They were exactly the same words which were used exactly four years ago by one of his predecessors—not last year, not in 1961, emphatically not in 1961, not in 1960, when taxes were increased just after the last election, but four years ago, in 1959. The emphasis then was on expansion, and it is again today. Again it is the same theme, which we heard, not in 1958, 1957, and 1956 when the present Prime Minister was Chancellor, but in 1955. Then the theme of the right hon. Gentleman the present First Secretary of State was expansion, because, of course, expansion for hon. Members opposite is not a continuing philosophy. It is a quadrennial inspiration animated by factors other than purely economic ones.
I well remember in 1959 the then Chancellor of the Exchequer saying that not only he but the whole of the Treasury Bench were expansionists. We were deeply moved at the time; we welcomed it. I remember making some remarks about the technical character of the mass baptism we were witnessing. But where were these expansionists in 1960, in April, 1961, or in the "Little Budget" brought in by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) in July, 1961? The plain fact is that today the present level of unemployment, the fact that for three years our production has barely increased at all and the continuing failure to keep up with all our main trading rivals in the matter of industrial expansion, are the result of the Government's failure to follow expansion programmes and policies once the 1959 Budget had done its political work.
So our criticism is certainly not that the Government have been expansionist this year in the Budget—we welcome it. Our criticism is that for three years past they have held back expansion deliberately as part of their fiscal policy. It has been quite deliberate that an overcautious policy should be followed year after year so that the right hon. Gentleman should be able this year to hand out something in the Budget this afternoon. It is not merely that we can say this looking back. I think we can claim in every detail that we said this would happen. This was the theme of our debate on 18th July, 1961, when we said that this was the policy which would be followed and that the Budget of 1963 would bring in a glorious financial bonanza. I think we can claim that as long ago as May, 1958, this four-year electoral cycle was the policy of the Government.
If the Chancellor is right to do today what he has done, for example, for the unemployment areas, for example, for the general motive of stimulating the economy—I think he is right to do these things today—we might ask why it was not done last year? Can any lion. Member suggest a real reason why if the economy was so weak last year and is so strong this year that we can afford to do it this year but could not afford to do it last year? It will he obvious that if these Measures are as effective for dealing with unemployment as the right hon.


Gentleman hopes they would have been just as effective a year ago in preventing unemployment as in curing it.
Many hon. Members will not judge the Budget on detailed tax changes, to which I shall turn in a moment, but on the size of the hand-out. It might be interesting to show the Committee the way in which the pattern of hand-outs has been followed in the last ten years. In 1954 there was a net hand-out of £5·8 million. In 1955 the hand-out was £155½ million. That was the first Budget of 1955. After the election, of course, we had an autumn Budget, in which the hand-out was minus £113 million—£113 million was clawed back very largely—[An HON. MEMBER: "What about the 1951 Budget?"] No one could accuse us of having an election Budget in 1951. But in 1955, £113 million was clawed back from those who had the benefit in April. Then in 1956, the election over, and with a new Chancellor, the Budget was colourless. It was a total hand-out of only £1·6 million. That was about 100th of what it had been a year earlier. In 1957 theer was a hand-out of £11·7 million, mostly in respect of overseas trading corporations. In 1958 there was a hand-out of £9·7 million, and, of course in 1959 the tremendous hand-out of £320 million.
Of course, that was 1959, and some of my cynical hon. Friends thought that it had something to do with an election. But, of course, it had not. It was due to the conversion of the Government Front Bench to the principles of expansion, and in 1960 the Government showed how lasting was their conversion by having a hand-out of, again, minus £72 million. Six months after the election they took net £72 million off the taxpayer. In 1961, £110 million was taken away by the right hon. and learned Member for Wirral, and I am not dealing here with all that the right hon. and learned Gentleman did in the course of the following year. I think that in 1962 the figure was about £9 million taken away. It was nearly neutral last year. In 1963 we are having a net hand-out of £250 million. The quadrennial pattern is being preserved.
If we take all the Budgets for the years 1954 to 1962 we find that the net

reductions in tax liabilities in those nine Budgets amounted to £457 million. The whole of this was given in 1955 and 1959. Indeed, what was then given exceeded that figure. The Government gave in those two Budgets out of the nine in those years a net hand-out of £515 million and spent the other seven Budgets clawing it back. If we bring in the 1963 Budget, then for the ten years we have a net concession of £707 million, and the amounts given away in 1955, 1959 and 1963, the magic years, add up to £765 million. The remaining seven Budgets out of the ten in that period have produced net increases in taxation.
I thought this might help the Committee to understand the economic motivation that we have been having in these matters. Of course, the Chancellor is right to reflate. I think that should be said absolutely clearly. But, of course, he or his predecessor should never have deflated to the point where this amount of reflation was necessary. Last year, for example, my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) made as his main criticism of the Budget of 1962 the fact that it was too deflationary, and so it has proved. If we had had a steady expansion year by year this would have meant not only a higher standard of living and a bigger contribution to the under-developed areas, but a higher standing for us in the world. The stop-go economy has lost us not only a great deal of worth but a great deal of influence in the world.
The National Economic Development Council now recommends a 4 per cent. increase per annum. If the Government had made that their target twelve years ago, and stuck to it, we should have increased the national output by £3,400 million more than has actually been achieved. Because of the Government's failure to maintain a steady increase in production and because of this timid holding down of the economy for three years out of four, the nation's production today is £3,400 million a year less than it would have been if the N.E.D.C. target had been followed over that period.
Nevertheless, however late and however precarious some of us may regard the nature of the right hon. Gentleman's conversion, we welcome his support for the principle of expansion. May I say that I welcome the very heavy concentration in


the early part of his speech and in some of his proposals on measures to get industry moving again and to encourage investment in industry? As I say, we must ask the right hon. Gentleman why, if it is right this year to do this, it was not done last year so that the unemployment we are now having would not have developed into a great deal of hardship, and certainly unemployment areas would have been avoided.
I am glad the right hon. Gentleman said that expanding production and a strong £ go together. I am glad that he has come round to this view. Of course, the £ a year ago was at least as strong as it is today, and if it is safe to embark on this expansionist programme today in order to reduce unemployment, why was it not safe to do it a year ago? As I say, the £ was at least as strong then, and some say stronger than at present. However, I am very glad that the right hon. Gentleman has said that in his view expansion is the road to a strong £ and is not incompatible with it.
We on this side of the Committee have said that in the House year after year, and what we said on this point was rejected by Chancellor after Chancellor opposite. From the Prime Minister onwards, we were told that the £ would be endangered unless we cut down production and held it down, and that we were trying to do too much. That was the theme of every Chancellor until today's speech by the right hon. Gentleman. But I am not suggesting that the present Chancellor is of a different category from his predecessors, because I remember him arguing this in the most sophisticated manner in every financial and Budget debate which we had between 1955 and 1961, or even 1962.
It is clear—indeed I should have thought it obvious—at least to say that it is the restrictionist, the sluggish economy, the economy where we have factories and plants working below capacity, a situation such as that which puts up costs and endangers sterling. It is when we have a booming economy—not inflation—growing all the time that we have the factories necesary to produce the strong £. I am glad that the Chancellor agrees with that.
On what the right hon. Gentleman said about world liquidity, and I thank him for welcoming new allies to this campaign of his, if he will turn to HANSARD for 26th November, 1959—he had better check this; I have not had a chance to look it up, but I am willing to chance my arm on it—he will find that in the debate on the Radcliffe Report we on this side of the Committee put forward very much what he has put forward in the so-called "Maudling Plan"—and a great deal more—in our terms for world liquidity. As I say, we welcome these new allies and we also welcome the right hon. Gentleman's conversion to what we said two years and more ago on incomes policy.
The right hon. Gentleman says that we must always relate incomes policy to production, but two years ago the Government's policy was to restrict production and then to tailor the wages system to fit a contracting economy and to use some brutal means to enforce that policy. We welcome also the right hon. Gentleman's conversion—and I want the Committee to understand that I do not underrate at all the importance of all this—to proposals which we made long ago for linking aid to underdeveloped countries to the unemployment problems of this country, and also his conversion to—and it is wonderful what a couple of by-elections will do—and his acceptance of our view that the Local Employment Act was a dead loss, as my hon. Friends have been saying over the past two or three years.
We also very much welcome his acceptance of the principle of a discriminatory tax relief for industry going to development areas. We voted for it last year and in previous years. The Chancellor went into the Division Lobby against it. So did all hon. Members opposite, who cheered him when he made the announcement today, including the hon. Member for Esher (Sir W. Robson Brown), who, when he heard it, shouted "Brilliant". Obviously the hon. Member was so overcome by the novelty of the proposal that he has not come back to us.
I also welcome very much the Chancellor's idea of writing off the full extent of expenditure by a businessman in these development areas. This is the system


first introduced in Sweden, as the Chancellor knows. I think that with all modesty we can say that we have pressed for it year after year. That is on the record. I think that I know past Budget debates and speeches sufficiently well to be prepared to accept challenges on this. I would not make this statement unless I were prepared to have a substantial wager with the President of the Board of Trade about finding the necessary chapter and verse.
All these things we welcome, but I ask again, why were they not done before? If they are so essential for the unemployment areas—and we welcome them as a significant contribution—why were they not done in 1959? Why were they not done in 1962 so that the tragedy of the unemployment areas of the last year could have been avoided?
Before I sit down, I have a few comments to make on detailed items. The House would not expect me today to go over all the detailed proposals, and it would not be in accordance with the tradition of the House for me to do so. If he catches the eye of the Chair tomorrow, my hon. Friend the Member for Cardiff, South-East will spend a great deal more time dealing with these things. May I refer to one or two?
We support what the Chancellor announced today about Schedule A. We have often gone into the Division Lobby in support of this proposal, and we have had some rather odd company with us on some occasions. We have been there at any rate in support of a modified form of what the Chancellor has done.
We welcome the statement in his speech about the tapering of the child allowance. My hon. Friend tomorrow will deal with the restoration of allowances for Rolls-Royce cars and similar cars. I find it a little difficult so soon after the Chancellor's speech to see how this proposal fits into his incomes policy, because there is no doubt who will be cheering this concession. He suggested that it would be the Rolls-Royce workers. I admit that I have never known a Tory Chancellor lack a respectably sounding excuse for a piece of cheerful aid for a limited number of people. We had an example on the Surtax concession three years ago. It was said that it would produce incentives and increase production and exports. In

fact, production has not increased since then and exports have increased less than in almost any other country in the world. We always hear these respectable reasons.
But the Chancellor should recognise that restoring the full fiscal allowance means at the end, stripped of all hypocrisy, that more expensive cars will be running around the country at the Chancellor's expense for the benefit of individuals. This money comes out of the public purse, out of the taxpayer. Yet when my hon. Friends and I go to the Chancellor or the Minister of Health for an allocation of a few dozen invalid cars for paraplegic ex-miners or to extend the provision of cars to some disabled ex-Service men, we are told that the country would be bankrupt if this concession were made. But all the money comes out of the same national pool.

Mr. Grant-Ferris: Does the right hon. Gentleman realise that this concession will bring a tremendous advantage to my constituents in Nantwich and also to those of his hon. and learned Friend the Member for Crewe (Mr. Scholefield Allen)? Is he aware that there will be great rejoicing in Crewe and Nantwich?

Mr. Wilson: I have dealt with that point. It was fully made two years ago, but I do not remember a substantial number of hon. Members voting against the proposal two years ago when exactly the same argument was put by hon. Members on both sides of the House.

The President of the Board of Trade (Mr. F. J. Erroll): Why did not the right hon. Gentleman vote against it today?

Mr. George Thomas: Be quiet.

Mr. Wilson: The right hon. Gentleman will not be disappointed when he sees the Amendments which we put down to the Finance Bill after we have had our usual quick consultation.
The right hon. Gentleman also referred to gambling. We note that he is to examine this matter further and that he feels that whatever is done would have to cover the rest of the gambling field. At the moment gambling taxation is somewhat selective. He might consider this point: if he were to go for gambling and speculation, why not make his predecessor's capital gains tax really effective


and make a proper job of the tax on gambling? If he did this there might be a lot of feeling in all parts of the House that if we were able to tax speculative deals effectively there might be a case for following up the good which the Chancellor has done today in getting rid of the Stamp Duties altogether. It would, I think, be possible to do that and to deal with the problem of investors, if at the same time we were able to deal much more adequately and effectively with the problem of capital gains.
The right hon. Gentleman has not come round to the T.V.A. turnover tax. It is a rather odd proposal to invite one accountant to go away and to think about it. After all, he has had about two years to be thinking about it himself. It seems rather odd to have spent two years since we mad: this proposal in the debate on 26th July, 1961 and then to tell us, after all this time, that he has turned it down but will ask some independent accountant to look at it. On his own argument there might have been a case for setting up a high-powered Committee representative of tax experts and industry, because the point which he left uncertain was what the reaction of industry would be to it. I do not think that a one-man inquiry is the way to do it, and I should have thought that the Chancellor would set up an appropriate departmental committee to find this out.

Mr. Maudling: He is a prominent merchant banker, one of the younger leading bankers, and he will have others to help him. I chose him because he will have knowledge of the reactions of business to a scheme of this kind.

Mr. Wilson: I thought that there would be a few people in the right hon. Gentleman's Department in the last few years who also knew a bit about it, just as does Mr. Gordon Richardson. If I am wrong about that, the Chancellor ought, I think, to have set up a full-dress departmental tax committee to look at the question.
Finally, I come to the Income Tax concessions announced by the Chancellor at the end of his speech. Not only do we welcome these proposals but I think that we can all claim that we forecast that they would be in the Budget. Anyone who read a report of my speech at Macclesfield a fortnight ago saw that I forecast that this is what the Chancellor would do.

We felt that it was right and we said so at the time. When the Chancellor has to decide in direct taxation between a cut in the standard rate, on the one hand, and handling it by means of these allowances, on the other hand, we remember that four years ago the Chancellor said that it was the turn of the standard rate. If that were so, than this was the turn of these allowances. We very much welcome the Chancellor's decision.
Once again we must ask why it was rejected last year. Every hon. Member who waved his Order Paper this afternoon when the Chancellor made this proposal voted against the same proposals last year when they were moved from this side of the House. If they want to be fair about it, the Committee will recollect that the central theme of the criticism of the Budget by my hon. Friend the Member for Cardiff, South-East a year ago, the central theme of the proposals which he pushed more than anything else in the Budget debate, the Finance Bill debate and the Amendments to the Finance Bill, was the suggestion that if we wanted to get production moving up and if we wanted to get justice in the fiscal system, we should make an attack on the problems of these allowances and exemptions and take about 3 million to 4 million people out of the field of Income Tax. That was put from this side of the Committee, and the Chancellor of the Exchequer, the Leader of the House, and all the rest of them who have been cheering this afternoon voted it down. Even though a year late, even though much good could have been done a year earlier, we welcome the proposals the Chancellor of the Exchequer has made.
In general, as I have said, we welcome the fact that the right hon. Gentleman has decided to have a reflationary, an expansionary, Budget. We only regret that he has been so long coming to it. We welcome the fact that a substantial part of the Budget deals with industrial expansion, aid for capital allowances, and things of that kind. In the field of direct taxation, we welcome what the Chancellor has done in the respects I have just discussed. Our criticism is that this ought to have been done before. Our criticism is that once again it bears all the marks of a cleverly planned and cleverly thought out election strategy.

5.50 p.m.

Mr. Eric Johnson: This is not the first time I have had the honour of being the first from this side of the Committee to congratulate the Chancellor of the Exchequer on the presentation of his Budget. I do this with particular pleasure, because I recall that the first debate on a Finance Bill that I ever heard was in 1952 and my right hon. Friend was then drafted from the office of Parliamentary Secretary to the Ministry of Civil Aviation, as it then was, to the Treasury to take part in the debates on the Finance Bill. I remember thinking at that time, as I expect many who heard him thought, that there spoke a future Chancellor of the Exchequer. I wish it was always as easy to make correct forecasts.
The new method of presenting the Budget is a good one. I must confess, as somebody who listened to what was, after all, a long speech, that it seemed to be a little more difficult to take it in when presented in the new way. Perhaps that is something we will get used to. I am sure that it is absolutely the right way to do it.
I found the content of it very difficult to quarrel with, as indeed did the Leader of the Opposition. Never before have I heard a Leader of the Opposition so complimentary about a speech by a Tory Chancellor of the Exchequer. I do not think that the Leader of the Opposition found any way in which he could criticise it, except that he seemed to think that it was rather too good, and he attributed this to the fact that he thought that there might be a General Election coming this year. I would only say to the right hon. Gentleman, if he were here, "You ain't seen nothing yet", because in my view there will not be a General Election until after one more Budget. If this is a good one and if we run true to the form which the right hon. Gentleman attributes to us, what are we going to get next time? It will be a very good one indeed.
Everyone would agree that the task facing the Chancellor of the Exchequer today was mainly how to increase our exports and deal with the problem of our having a great deal of under-utilised capacity in industry. If we can solve the problem of using that capacity, we

will go a long way to solving the problem of unemployment. Therefore, I do not think that any one would disagree with my right hon. Friend's statement that what we need is to expand both demand and production. The right aim is the one my right hon. Friend has set himself of a 4 per cent. increase without inflation.
I believe that in the past the Government have done a great deal more than they have been given credit for to deal with the unemployment areas. Today some splendid measures have been announced. We can look forward with a good deal of confidence to a very considerable improvement in the difficult areas. I was going to suggest to my right hon. Friend that prehaps it was not enough to build new factories and make loans to people to build factories in bad areas, unless they knew that when they went there they would be able to produce profitably. I thought that the Chancellor of the Exchequer might have to give some relief of taxation to make that possible. That is precisely what he has done. These other suggestions about public housing are excellent. As the right hon. Gentleman pointed out, the loans to underdeveloped countries to help them to buy from us are tremendously important.
There is one form of taxation to which I do not think my right hon. Friend referred. That is the Profits Tax. I have spoken about this tax on several occasions. I have had fairly lengthy correspondence with my hon. Friend the Financial Secretary to the Treasury on the desirability of taxing undistributed profits at a lower rate than those which are distributed in dividends. I know that my hon. Friend does not agree with me. I believe that many other people disagree with me.
I believe that a lower tax on undistributed profits would help our exports. Apart from anything else, industries hoping to compete successfully in the overseas market must be equipped with the best possible and the most up-to-date plant. The cost of new plant and its need obviously vary a great deal from one industry to another. In 1962 about half our exports consisted of iron and steel, machinery, road vehicles, and aircraft. These are all industries which use very expensive plant and in which there is a


great deal of competition, and the plant has to be kept up to date at a high cost. If the cost is high, it necessitates ploughing back a great deal of the profits to keep the plant in the best possible order. It seems to me to follow from this that a reduction in the rate of tax on undistributed profits would enable such industries to do more to finance themselves and keep themselves efficient. They would be able to use more of their own resources. The Committee will have noticed that the industries I have mentioned are those on which we rely to do so much of our export trade. They need most to keep up to date. I therefore believe that a reduction in the Profits Tax would help them and enable them to bring down prices. There is a strong case for this.
I had hoped that my right hon. Friend would see his way to reducing the tax on fuel oil used in industry. On the other hand, I accept his reasons for not doing so, at any rate at present. I still think that there is some case for abolishing the surcharge and perhaps going even further on the fuel oil used for road transport. The cost of fuel used in heavy goods vehicles is very heavy indeed. It is bound to have an effect on the delivered price of manufactured goods. It is not only the journey from the factory to the final sales point that the goods have to make by transport. Many classes of goods make many road journeys before they get to the final factory which makes them and from which they are delivered to the ultimate buyer, or to the port if they are for export. On each of those journeys tax must be paid at a heavy rate on the fuel used. If it could be reduced it would do much to bring down the cost of goods generally and help to reduce the cost of living.
Another important aspect of the tax on fuel is its serious effect on the cost of operating public service vehicles. If Dr. Beeching's recommendations on the railways are brought into effect it is clear that more bus routes will come into operation to replace the branch lines which are closed. This should lead to a greater demand for buses, including an increased demand on bus routes which are at present unremunerative. If the unremunerative services are to be operated the people operating them must be given the chance of making a profit or they

will not run them. One way of making this possible would be to reduce their costs by bringing down the tax on the fuel their vehicles consume. This would be much superior to giving a subsidy.
With the present high rate of fuel tax many rural bus routes are faced with diminishing receipts and, in some cases, gradual losses. This would have been an opportune time for my right hon. Friend to have reduced the tax on fuel used by public service vehicles. It is estimated that the cost of the tax adds about 10 per cent. to the cost of operating a bus. Manchester Corporation had to pay £581,488 in duty on fuel last year. In the last five years the Corporation has paid £2,783,000 in this form of taxation; a lot of money. If the tax were reduced it would make it easier to maintain the existing bus services and expand them where necessary in the thinly populated rural areas. Lower bus running costs would lead to lower fares and more passengers and in large cities it would mean some easement of the burden borne by the ratepayers.
Considering the Budget as a whole, I am perhaps most pleased at something my right hon. Friend has not done. I feared that he might have succumbed to the temptation to have a tax on gambling, and I congratulate him sincerely on the decision he has made. Not everyone may agree with me, but I can assure them that there are sound reasons for the decision my right hon. Friend has made. In this connection, he gave the figures more honestly than I have ever heard them given before and those figures clearly showed the amount of money that changes hands. My right hon. Friend pointed out the effects of such a tax.
After the 1960 Betting and Gaming Act, which made cash betting off-the-course legal and established betting offices, Parliament decided that it would be right to introduce a Betting Levy Act by which betting would make a contribution to horse racing. My right hon Friend the First Secretary, then the Home Secretary, said in his Second Reading Speech on that Measure, when commending the levy:
The justification for it is the need to provide the machinery by which a great national sport and a national industry can be prevented from getting into trouble or declining.


He said that if, as a result of the Measure, public support for horse racing could be maintained and increased, its purpose would succeed. He went on to speak of the importance of maintaining our position and said:
… it is in the national interest that our prestige and, indeed, our pre-eminence in the breeding and racing of bloodstock should be maintained."—[OFFICIAL REPORT, 5th December, 1960; Vol. 631, c. 877–8.]
My right hon. Friend might have added that the racing and horse-breeding industry provides a great deal of employment and earns a substantial amount in exports.
Had my right hon. Friend introduced a tax on bets on horse racing today it would have meant that less would have been available for the present levy which is designed to assist this industry; a levy which comes out of bookmakers' profits. I will not labour this point and I appreciate that the Chancellor said that he was guided to some extent by the experience of my right hon. Friend the Member for Woodford (Sir W. Churchill) when he introduced the 1926 betting tax and had to repeal it in 1929. It is worth noting that on that occasion my right hon. Friend the Member for Woodford said:
… there is one of the new taxes for which I am responsible which has been a failure, which, indeed, has been a fiasco, and which obviously has caused more trouble than it is worth. I mean, of course, the duty on betting.
I am glad that my right hon. Friend has seen the red light and has not followed the line taken by my right hon. Friend the Member for Woodford in 1926.
A gambling tax of this sort would have undone what was achieved by the Betting Act. It would have brought back the street bookmakers. Nobody need think that all betting offices are gold mines. I know that some of them are profitable, but a very large number of small bookmakers in Manchester who were street bookmakers before are finding it extremely difficult to make both ends meet. Had a new tax been placed on them they might not have been out of business but they certainly would have gone out of their betting shops. They would have gone underground again, as they were in the past. As my right hon.

Friend the Member for Woodford said of the honest bookmaker:
The very fact that he has paid the tax has placed him at an invidious disadvantage compared with more slippery and unsubstantial rivals."—[OFFICIAL REPORT, 15th April, 1929; Vol. 227, c. 49.]

Mr. R. T. Paget: Is not the hon. Gentleman describing exactly the process we anticipated—that the big boys are swallowing up the little ones? Did we not say not so long ago that the big boys would make a packet out of it and would swallow up the little ones?

Mr. Johnson: I grant that many of the big bookmakers are doing well. Nevertheless, the little ones are not being swallowed up. They are struggling on, they know nothing else, because this is their livelihood and, as I said, they would go underground before being swallowed up should the occasion arise.
I am opposed to increasing the taxes on horse racing in any way. The bookmakers are already contributing about £10 million to the Exchequer in Profits Tax and Income Tax. This does not mean, however, that I am opposed to every form of tax on gambling. The Chancellor was absolutely right to undertake to go into the whole question of gambling taxation, because I consider that some of it is less desirable—I suppose that some people would say that all gambling is undesirable—and cannot be held in any way to be in the national interest.
Football pools already make a substantial contribution to the revenue and are paying enough. The dog tracks also contribute a great deal through the duty borne by the totalisator and bookmakers. But there are other forms of gaming, ranging from bingo to chemin de fer which appear to get away with it altogether. I have no information as to the amount the Treasury benefits from Income Tax and Profits Tax paid by those who operate clubs which run these entertainments. It may be a little difficult for the Treasury to make a lot of money out of them, but I cannot help thinking that the motives of those who run gambling clubs and so on are not wholly philanthropic.
I am not suggesting that it is wrong to indulge in these forms of gambling, but I do not think that anyone would claim that they are important in the


national interest. Nor do I think that anyone believes that the people concerned should not make a special contribution to the Revenue. As I understand the position now, it is perfectly legal to play any game of chance so long as it is carried on as an activity of a club and that if, apart from the annual subscription to the club, the only other payment made is a sum, agreed before the game, to take part in it. It might be worth my right hon. Friend's while to look at the possibility of registering and licensing these clubs, and it might also be possible to take a certain percentage of the charge made for taking part in the game. Obviously, we cannot tax the stake, but we could tax that charge.
If my right hon. Friend wants to fortify the Revenue at the expense of those who indulge in gambling—looking on it either as a rosy road to riches or merely as an existing pleasure—I would remind him of the saying, "If you can't lick 'em, join 'em." If he cannot get the money out of them in this way, he should go in for the business himself. I do not suggest that he should appear on the rails at Ascot with the Chief Secretary as his clerk—and my hon. Friend the Economic Secretary, judging from his rather inscrutable appearance, might make an admirable croupier. I do not go as far as to suggest that, but there are ways in which money might be made out of this tendency towards gambling.
Strictly speaking, the purchase of Premium Bonds is a form of gambling, the stake being represented by the interest foregone. If the prizes were increased, more bonds would be sold, and it might also be possible to allow a person to hold more than is permissible at present. That is a good way of getting in money, and it could be made more attractive.
Another means of raising revenue would be a State lottery. I know that this suggestion has been made before and has always been rejected, but a State lottery is far the least painful method of handing over one's money to the Treasury, because there is a reasonable chance of getting more back. I am sure that a State lottery would command widespread support. It would be a real money maker, especially if it were laid down that a percentage of the

proceeds had to be devoted to some cause of which everyone approved, such as the hospitals. People would flock to buy the lottery tickets.
These lotteries have an enormous success in other countries; Ireland's excellent hospitals benefit largely from the State lottery held there. Such a lottery would not only meet with a very favourable response here, but would attract vast sums of money from all over the world, and sonic of the proceeds could be used to reduce the burden of our own rates and taxes. I hope that when my right hon. Friend is reviewing the other aspects of gambling, he will give some thought to that suggestion.
My right hon. Friend said that his purpose is expansion without inflation, and his Budget will largely be judged by the extent to which it creates a climate favourable to the attainment of those two objectives. To me—and, evidently, to the Leader of the Opposition—it is a very hard Budget to fault. It is a very able and remarkable Budget. My right hon. Friend may not have done all that I should have liked done but, on the other hand, he has not done something that I greatly feared. He has provided the country with just about the right mixture for the present very difficult times, and we can look forward with some confidence to a great surge forward in our economy. I think that he will attain his objective of expansion at the rate of 4 per cent. without inflation this year and continue it in the years ahead.

6.15 p.m.

Mr. Ellis Smith: The country's economic situation is such that I should be justified in making a denunciatory speech. Instead, I want to be analytically constructive, and to ask certain questions about our financial and economic situation.
This is the twenty-eighth Budget statement to which I have listened. It is still a financial and economic statement, and that is a fundamental mistake for which I believe some of my right hon. Friends were responsible. The issues are too fundamental, too great, to be considered in one debate: they justify two separate debates. We have listened to a closely-reasoned case, concisely stated and put in the most simple language. Those who are greatest use the most simple language. The Chancellor took approximately 110


minutes and, as my right hon. Friend the Leader of the Opposition has already said, it was so interesting that no one went to sleep.
The right hon. Gentleman said that the theme of this Budget is economic expansion without inflation; and that if we attain the national objective which is the basis of the Budget it will mean a 4 per cent. rate of growth. I welcome that theme, but, meantime, the people have been betrayed, and have paid a terrible price because in the past our national policy has not contained this theme.
The Chancellor spoke of the uncertainty resulting from investment in stocks, but why not control or regulate investment in stocks in order to minimise the uncertainty that all students of economic affairs agree that it produces? I contend very strongly that this has been one of the great causes in the past, especially at certain times, of our balance-of-payments problem. A number of proposals for dealing with this problem can be found in the Library.
The Chancellor spoke of the problem of exports and reduction of export prices. We readily agree with that. He then made a great admission about the need for proper provision for dealing with redundancy, about which I shall have something to say. The right hon. Gentleman also outlined a number of proposed changes to deal with regional unemployment. We welcome most of these proposals, although in my view, and in the view of large numbers of people outside this Chamber for whom I am speaking, there are other areas which are suffering just as much as those which the Chancellor mentioned. The right hon. Gentleman proposed a tax incentive for certain areas defined by the application of the Local Employment Act. We welcome that within the limits of the right hon. Gentleman's statement, but those limits should be widened. Later I shall produce concrete evidence to prove the need for that widening.
As one who, apart from membership of the House of Commons, has been employed entirely in the manufacturing industry, I welcome the Chancellor's proposals to improve its position. These proposals should have been made years ago. All political parties should have contributed towards this end, because we

know that the country depends on exports now more than ever before. It is the manufacturing industry that produces these exports, and the men and management in the industry make the greatest contribution towards keeping life going in the country. It was time that the manufacturing industry received more consideration of the kind which the Chancellor is now proposing to give it. The right hon. Gentleman also touched briefly on concessions made to encourage new industrial building. Those of us who live in industrial areas, like Lancashire and North Staffordshire, know the need for these and we welcome the proposals.
Each General Election has produced new promises, and in each new Parliament there have been betrayals of those promises. After having lived through two world wars, and after hearing these promises made during the wars, and as one who still lives among the men whose representatives marched last week to the Palace of Westminster, I welcome the Chancellor's new theme. I must remind him and the Committee, however, of how promises made during the two world wars, and especially during the last war, have been betrayed. If the Chancellor's present theme had been the theme of all Parliaments since the end of the last war, the country today would have been in a far stronger economic position.
I should like to put on record some considerations in support of the theme, while at the same time showing and emphasising that it has not been followed during the past seventeen years. We need to be reminded that throughout the last war the country committed itself to maintaining full employment when peace came. This became one of the war aims of the Coalition Government. It was reinforced in the Beveridge Report and it was accepted by all political parties. It was accepted also by the International Labour Office and by the United Nations, and it was applied for a few years by the Labour Government. Now we have about 700,000 unemployed, which means that if we include their wives and children there must be about 1½ million people now suffering the effects of unemployment. This is a terrible indictment of the mismanagement of our affairs during the past seventeen years. It is because I recognise that at last a fundamental change


has been made that I welcome the Chancellor's statement.
I hope that this will be the beginning of a new road which we shall travel towards the restoration of full employment. I hope that at the same time the Government will put the rest of their policies in harmony with the Chancellor's theme today. If we are to have the best out of this new theme it will mean that when our representatives attend the United Nations and the International Labour Office in Geneva they must support not the reactionary elements but proposals which will be in harmony with the Chancellor's aims. This is not Utopian. It is a very practical proposition. It is in the interest of the world, and of Britain in particular, because the interests of our country now coincide with the world's interests.
I was very pleased in listening to the Chancellor's speech to note this new thread running through it. As I listened I hoped that it was the beginning of a great change which we on this side of the Committee will have to watch minutely in view of the fact that the people are increasingly placing their confidence in the ideas represented on our side. The restoration of full employment and later its maintenance should now be our common objective. We ought now to make our contributions towards seeing that this policy is applied. Full employment is the national and natural heritage of our people. They saved our country twice in two world wars, and the country owes them a decent standard of living and the opportunity to use their capacities to earn that living.
When we have 700,000 unemployed there is an obligation on the Chancellor to see that every unemployed man is paid at least 30s. a week in addition to the unemployment benefit, that his wife is paid another 30s., and each child is paid a proportionate increase so that the unemployed shall not be expected to manage on National Insurance benefit only. Since all parties committed themselves during the war to the aim of maintaining full employment, those who are unemployed through no fault of their own should receive the sums I have mentioned as a right, in addition to National Insurance benefit, to enable them to live decently until full employment is restored.
I was very pleased with certain observations made by the Chancellor. They reminded me that what needs saying strongly is that there is no production Santa Klaus in Whitehall, or in offices or in any part of the City of London. It is on industry, and on manufacturing industry in particular, that the country must rely more than ever. This must be stressed in this Chamber in order not only that the Chancellor should do justice to it but that all hon. and right hon. Members should have their attention drawn to it.
I am fortified in the plea I make since I have in mind what has happened at the International Labour Office in Geneva. At conferences there, our representatives have, very often, not been associated with proposals for the advancement of humanity but have been associated with reactionary proposals. I hope that whoever is to represent us there in future will remember what they owe to our people and will keep all that they do in harmony with the new theme which the Chancellor introduced today and with the principle of restoring full employment. In this country, we shall need a policy of real planning. We shall need a national investment board in order that our financial resources may be investel in industry and wherever the best benefits from the national point of view can be obtained.
Several times, the Chancellor rightly stressed the need for the Government to give a lead, and he asked for the co-operation of the whole country in achieving his objective. I wholeheartedly support that, but the logic of what he said is that we now need a Ministry of Production and Economic Development in order that the right hon. Gentleman's new theme can find expression in the country in an organised way. I readily accept the proposal made by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) last weekend that there should be a Commonwealth economic development and trading corporation, or something of that kind. I do not know why we have left it so long. This is something on which we all ought to be united if we want, as we do, to obtain the best results for our country in particular and for the Commonwealth in general.
One thing to emerge from the Second World War has been the international


expression of our desire for the advancement of mankind and the improvement of standards of life. The first United Nations trade and employment conference was held in London, and a later United Nations conference in Havana laid the ground for the eventual coming of the G.A.T.T. In Torquay, in one of the most beautiful parts of this country, there are trees planted in the name of all the countries attending the international conference there where the G.A.T.T. was born.
Yet, in spite of the pursuit of a progressive policy at the United Nations and at the International Labour Office, we have, very often, sat back and not taken the initiative. For this reason, too, I welcome the Chancellor's initiative today. However, as I have said, if the logic of it is to be followed, it must find expression also at the International Labour Office and the United Nations.
Under the inspiration of the International Labour Office, the United Nations Havana Charter declared that national trade and employment targets should be set so that
Each nation shall take action designed to achieve and maintain full and productive employment and large and steadily growing demand within its own territory through measures appropriate to its political, economic and social institutions;
Member nations shall seek to avoid measures which would have the effect of creating balance of payments difficulties for other countries.
This is a theme which we should have been applying since that conference, which was held, if I remember aright, about fifteen years ago. Today, the Chancellor, who is responsible not only for financial affairs but for basic economic policy in Britain, has at last shown that we can put ourselves in harmony with the proposals of the United Nations.
It seems that in war, when every one of us is wanted, these great aims can be considered, but that when the danger is over there can be 700,000 unemployed. This is why I am making the kind of speech I am today. I could easily have been one of them. I have been fortunate in life. I have had an opportunity to represent my fellows and maintain their confidence. As a result, after many years, I am still able to sit in the House of Commons, privileged to represent the

people to whom I belong. I cannot sit here with a smirk on my face like some hon. Members. These are matters which affect our people deeply. This is why I was associated with the 7,000 who marched down here last Tuesday.
The International Labour Office at Geneva, with this country represented, issued in 1944 the following statement which has been reaffirmed at Geneva conferences each year since:
All human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity;
the attainment of the conditions in which this shall be possible must constitute the central aim of national and international policy;
all national and international policies and measures, in particular those of an economic and financial character, should be judged in this light and accepted only in so far as they may be held to promote and not to hinder this fundamental objective.
In the light of those aims expressed at the International Labour Office, I welcome the new theme outlined by the Chancellor. It does not go anywhere near as far as I should like, but I am sufficiently a realist to know that, if only a short step is taken, it should be encouraged in the hope that one's fellow countrymen will demand more.
In 1940, the Conservatives were completely discredited in this country. It was obvious, with the way things were going, that we should lose the war. As a result, the most constructive and progressive element in the British community began to express its will. There was growing uneasiness among the trade union movement outside and a popular demand that action should be taken. The Conservatives had kept out of office for more than ten years the giant who used to sit in the corner seat of the Front Bench below the gangway and had to be satisfied with making critical speeches.

Sir Harmar Nicholls: My right hon. Friend still sits there.

Mr. Ellis Smith: Yes, he still sits there. He was a giant. His record is that of a giant. But the Tories kept him out of office for ten years.
As a result of the organised working class outside reflecting itself in the House of Commons and in Committees upstairs and behind the scenes, a situation was produced which brought about a change


from a Conservative Government to a win-the-war Coalition Government, and the giant, the right hon. Member for Woodford (Sir W. Churchill), was made Prime Minister. It was we who made him Prime Minister, who sustained him for some time, and who cheered him when he came in. The Conservative benches looked like a cemetery; one would have thought that all was dead.
As a result of that policy, we can use our democratic rights and we can all make our contributions in this Committee. Just as we nearly lost the war because of the way in which it was being conducted, over the past few years there was a danger of losing our economic future unless there was a fundamental change. I have paid tribute to the concise manner in which the Chancellor of the Exchequer spoke for 110 minutes. He held the Committee right to the end, and that is a great tribute to him. It is not only an intellectual strain but a physical strain for a man to do that, and he deserves credit for the competent manner in which he did it.
I therefore hope that this is the beginning of a change which, much though we are opposed to the Conservative Party politically, will gradually reflect itself in improvements in the country. I hope that when we have the opportunity of forming the Government our relatively young men who become Ministers will bear in mind that it is no easy course to row for Labour Ministers to act as real Labour Ministers. I hope that they will remember who has given them their confidence. I hope that they will remember what they owe to the people who built up this party and will remember all the promises which they have made. I trust that they will use their courage, understanding and capabilities in order to save this country and to enable it to make a greater contribution in world affairs and towards improving the standard of living of our people. If they can do that, we shall see the beginning of a change which will be in harmony with the theme running through the Chancellor's speech this afternoon.

6.42 p.m.

Mr. Dudley Smith: It is always a pleasure to follow in debate the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) who is my namesake, because he speaks

with such sincerity, moderation and good sense. I subscribe to many of the feelings which he has expressed this afternoon. I am afraid that I am not in his position of having had experience of over 20 Budgets.

Mr. Ellis Smith: Twenty-eight.

Mr. Smith: In my limited experience, this is the fourth Budget which I have had the pleasure of hearing, and it is by far the best that I have heard. I believe that it is an expansionist and able Budget and is extremely realistic.
I welcome this Budget particularly, because I think that it will help the young married person who is making his way in the world and will provide him with an incentive. This applies particularly to the young married person who is fulfilling his duty to society by founding a family. In my constituency, as in many others, there is a great proportion of young professional people who are on low salary incomes but who are making their way in the world, are founding their families and have very great financial responsibilities. I am sure that they will be pleased at the news that my right hon. Friend gave this afternoon.
I think that a change in allowances is so much fairer than a change in the standard rate of tax. Many of these people will also benefit from the abolition of Schedule A via their pay packets in July, because at present they pay Schedule A via P.A.Y.E. My right hon. Friend's announcement this afternoon will give them an additional boost in due course.
As one who has campaigned about it consistently, both before coming to the House of Commons and since, I do not disguise my pleasure about the abolition of Schedule A at one fell swoop. I am not alone in this. Many of my hon. Friends have campaigned for its end for many years. I have always felt that it was an unfair and iniquitous tax, and I am pleased to see it go, particularly as it affects owner-occupiers. My party has stood for the owner-occupier over the years, and I believe that the abolition of this tax will be of material help to him. It is in the interests of the country that owner-occupation should be encouraged.
I think that it is a realistic step, too, to raise the Estate Duty limit to £5,000,


because this will aid the family of limited means which is often left in difficult circumstances through the death of the breadwinner. It does not require much effort today to accumulate an estate of £5,000, if one is earning any money at all. Therefore, what my right hon. Friend has proposed is a step in the right direction.
In addition, younger married people and those who propose to get married will benefit considerably from the exemption of Stamp Duty on houses up to £4,500. Again, this is a very good move in the right direction.
At the other end of the scale, elderly people will benefit from the raising of the exemption level. Elderly people recently have had a tremendous boost in their pensions—for the fifth time running under this Government—and my right hon. Friend's proposal will aid them over the earnings rule.
As my right hon. Friend said in his very fine statement this afternoon, the Budget will give relief to all taxpayers but chiefly to those on the lower levels. Despite the somewhat carping criticism of the Leader of the Opposition, I should have thought that it was well in line with the progressive reduction of direct taxation which has been going on in the lifetime of this Government over the last 11 or 12 years. No one could fault the Government's record in what they have done with regard to direct taxation.
The criticisms which I should like to make are necessarily somewhat muted because of the general excellence of the Budget, but I must say that I am sorry that my right hon. Friend has not tapped the rather rich vein of gambling, and I remain somewhat unconvinced by his 'arguments about it. I should have thought that this was a lucrative source of additional revenue. A gambling tax would not hurt anyone in particular and certainly would not be penal. I would not for a moment seek to challenge the figures which my right hon. Friend produced about the net amount remaining after winnings are paid, but one has only to go by any betting shop—and I speak as a non-gambler—and see the people packed to the doors every time that there is a race meeting on, to realise that tremendous sums of money must be changing hands. I was amazed to hear the

figures which my right hon. Friend gave this afternoon. I am pleased that he will consider this matter further. I hope that in due course we shall have a tax on gambling. It is desirable, fair and just.
I should have used the revenue to be obtained from a betting tax for the relief of fuel duty. This would have made a very material contribution to stabilising the cost of living. Here is another possibility which my right hon. Friend has missed, although I subscribe to the overall pattern of the Budget. Fuel tax is very high, and there is scope for reducing it. The cost of petrol is particularly high. There may well be another Budget in the lifetime of this Parliament, despite what was said by the right hon. Member for Huyton (Mr. H. Wilson). If there is, and if my right hon. Friend manages to keep the economy on an even keel, which I am sure he will do, perhaps he will consider both the question of a betting tax and the relief of fuel tax.
Undoubtedly, as time goes on, my right hon. Friend will bear more and more in mind the need for expansionist measures. In doing this, I urge him very much to consider a particular hobby-horse of mine and of many of my hon. Friends and about which we are very worried. I refer to the question of raising the Exchequer contribution to local revenue. I am sorry that in his admirable speech my right hon. Friend made only one oblique reference to the rising cost of local government services. He mentioned the education service, which is, of course, by far the most costly of them all. I believe that a general move could be made to transfer more of the burden of education to the national Exchequer.
In 1950 we were spending between £200 million to £300 million per year on education. Today, as we heard from the Chancellor, this expenditure is approaching £1,300 million a year. This creates a tremendous imbalance, and it must eventually be corrected. This is not a political matter. It is something which would affect any political party which happened to be in power. In many cases local authorities are spending about two-thirds of all their revenue purely on education services.
I beg a progressive and enlightened Chancellor, such as the one we have, to look at the matter before local taxation—that is really what local rates amount


to—gets right out of hand. We must all agree that local authority expenditure will continue to climb as the years go by. My right hon. Friend should encourage the Government to have an inquiry into additional and alternative sources of revenue, and he could also well consider a fairer distribution of the general rate burden. The Government are not to blame for the situation which has arisen. There have been vastly expanded services over the last 10 years, and as a result of the improvements the rating system has become somewhat overburdened.
It would be churlish of me, however, to make more than a passing criticism of this more than good Budget. The lessons to be learnt from the statement that we heard today are that we must bear in mind the figure of 4 per cent. the whole time, which is the growth target—and is realistic; we must also watch continuously the inflationary trends which are likely to come in an economy like ours which is always running along a knife edge; and we must organise competition and provide incentives to expansion.
I am sure that in the country as a whole the Budget will be welcomed because it provides incentives, because it provides an opportunity for industry to get on the move again particularly in the areas which have been seriously affected, and because it provides a boost for a very valuable and important sector of the community, namely, those young people who are beginning to make their way in the world and desperately need help at perhaps the most expensive period of their lives—when they have young children.
Last weekend a Sunday newspaper said in a headline "Has Reg the Edge?". Having heard the Chancellor this afternoon, I would say that he has not only the edge but also the vision and the determination to carry through his Budget and conduct the Government's financial policy in a satisfactory and admirable way.

6.53 p.m.

Mr. Ron Ledger: I do not want to delay the Committee too long because I think that the way in which the Chancellor has presented the Budget suggests that, as most of us would want him to do it, he has considered the general position with regard to unemployment to

the satisfaction of most of us. We have our own constituency problems, but I think we should all have preferred him to deal with the matter in the way he did.
Many congratulations have been offered to the Chancellor upon the way he presented the Budget, but I cannot believe that hon. Members opposite or, indeed, my hon. Friends are really surprised at the sort of Budget which he presented. The Leader of the Opposition made the strong point that this is, after all, the fourth year in which successive Chancellors have presented very good Budgets. In any case, I think that a great deal of what has been said about the value of the Budget to young people is not quite as good as it sounds. After all, we have recently had announced some increases in Post Office charges which are not inconsiderable, there have been increases in National Health contributions, and, if Dr. Beeching has his way, there will be a considerable increase in fares. Therefore, all the announcements made in the past few weeks tend to balance to some degree any benefits the Chancellor has given. Nevertheless, I welcome what he has done and the way in which he has distuributed what has been available.
That brings me to the constituency point that I want to raise. During the past few years it has become the habit in Budgets to give help to selected industries. Recently the motor car industry gained considerably from concessions made by the Chancellor. In my constituency I have really very little industry; what there is is mostly light industry and it is varied. But one of the largest industries there is furniture, and during the past year two factories have been closed.
I should have thought that the Chancellor would have given some thought to this industry in which a considerable amount of short-time working is occurring in the country. Nearly a quarter of the factories are working only two or three days a week and while they are working the employees are underemployed. A survey made of the facts in the London area by the National Union of Furniture Trade Operatives showed that half the factories producing furniture in the London area are working with considerably reduced personnel and


almost all the remainder are working on short-time. I should have thought that in this respect it might have been possible to give even greater help to young people starting out in married life. They might have had not only tax concessions but very considerable help from the Chancellor in furnishing their homes, which is in any case difficult enough today because of the cost.
I would point out to the hon. Member for Brentford and Chiswick (Mr. D. Smith) that the major part of the increase in the cost of new houses today has been the result of Government policies during the past years, and I think that the Chancellor might have given a little thought to people who are purchasing houses. Consequently, I do not think it would be right to say that everybody will jump for joy at the Chancellor's proposals. Certainly I, as one of the Chancellor's constituents, am not convinced that I ought to change my Opinion and vote for him at the next General Election.
I have a very strong feeling that the Chancellor has been very genuine in the way he has distributed the money available, but the whole thing is spoilt by the fact that there is nothing that he has done today which was not necessary a year or two ago. Had he introduced these measures then, we should have given him far greater support and—although we shall no doubt support the proposals he made today—with a great deal more enthusiasm. We should then have been able to avoid the unemployment which has come about during the past two years.
My final point is on light hydrocarbon oil used in manufacturing. The Chancellor said that he would ask the Customs and Excise to look into the matter, presumably to see how these oils could be distinguished from other fuel oils in order to exempt them from some or all of the tax. It is rather strange for the Chancellor to say this, because Amendments have been tabled to Finance Bills during the past few years on this subject and the matter has been discussed at length, and normally Chancellors have replied that the concession could not be afforded because it would amount to about £9 million a year. I wonder whether on this occasion the Chancellor has simply given another excuse because

he does not want again to say that we cannot afford it, for that would be difficult in view of the fact that he has decided to distribute so much money. It may be because of that that he now says that he will ask the Customs and Excise to look into the matter. I believe that the Customs and Excise has been the stumbling block previously in suggesting that it was difficult to distinguish between the oils used in manufacturing and those used for transport purposes.
All I say is that it is grossly unfair to our manufacturers who use these oils that countries which are in competition with us have the advantage that they can produce their goods with a much cheaper raw material. In this respect we are at a disadvantage. We are also at a considerable disadvantage in exporting. I had an opportunity of visiting a factory in my constituency where they produce polish, and I was astonished to find that 70 per cent. of the content of polish of any kind is made up of light hydrocarbon oil. So it is a considerable cost in the production of polish and, of course, the duty would make a considerable difference to the production costs and to the competitiveness of such firms.

The Economic Secretary to the Treasury (Mr. Edward du Cann): I just want to reassure the hon. Gentleman on this point. He may know that I myself saw the deputation from the industry on this very point and the argument he is making is most certainly accepted. Particularly I want to reassure him that it is definitely our intention to abolish this duty, but it is a complicated matter, as he knows from his experience, and that is the only reason why it cannot be done at once.

Mr. Ledger: If I have done nothing else I have at least got this reassurance which will, in turn, reassure the industry. I feel it must be raised again in Committee on the Finance Bill. This will give considerable benefit to the industry and will add considerably to its ability to export.
I say frankly that it was rather extraordinary to find that polish, which we do not think of as all that important, was exported last year to the value, I believe, of nearly £3 million. It seems incredible, but it shows that the industry is making its contribution to our


export drive, and I feel that relief from duty will enable it to compete even more.
Having raised these points, which, as I say, are constituency points, I must say again that if the Budget speech was a very interesting one, and very well put by the Chancellor, I hope that during the debates which follow we can be convinced just a little that it is not a prelude to a big election fight but that this is a genuine move to try to put the country back on its feet. We shall need a lot of convincing that what it is necessary to do today was not just as necessary two years ago. We feel very strongly that the Government had all the power they needed and just the same majority to put these proposals through two years ago and could have done so had they wished.

7.2 p.m.

Mr. A. E. Cooper: I do not intend to go into all the economic arguments about why the Government did not do two years ago what is being done today. I know it is a revolutionary thought, but times do change, and circumstances two years ago were really quite different from those which obtain in the country, and, indeed, internationally, today.
Two years ago we had a situation of not only full employment but over-full employment in practically every part of the country with the possible exception of parts of Scotland. I think that two years ago unemployment in this country was running at round about 2 per cent., and if what is being done today had been done then it surely would have caused a most inflationary situation which would have made the unemployment we have unfortunately suffered this winter pale into insignificance.
Hon. and right hon. Gentlemen opposite must really remember all the time that it does not matter what party is in power, this country depends for its very livelihood on one raw material only-coal. Everything else we have to bring into this country. We can feed ourselves for only half the year, and if we pep up domestic consumption in this country beyond reasonable limits we shall increase our import bill and if it is not matched by substantial increases in

exports we shall run into very serious balance of payments problems. In this day and age, after ail that has gone on before the war, during the war and since the war, that any hon. Member of this Committee should have to state these basic facts seems an extraordinary thing, when they really should be the ABC of the political life of this country. It is high time that we stopped trying to make political capital out of something which it is in all our interests to try to understand.
Many things which have happened in these last few years have themselves brought about some of the problems which we have today. Hon. and right hon. Gentlemen opposite for years have been pressing for more and more industrial investment in all spheres of activity in this country. All right. So that is exactly what we have had. Many thousands of millions of pounds of investment in industry has taken place over the last few years.

Mr. E. G. Willis: Not in Scotland.

Mr. Cooper: This investment has resulted in more up-to-date machinery, greater automation and mechanisation, meaning less actual manpower to use those machines, and these are some of the problems we have to work through. It is no use the right hon. Gentleman the Leader of the Opposition coming back from America and making the sort of speech which he made today, complaining that he did not sleep last night. Frankly, from what he said today, we should have benefited much more if he had had a few hours' sleep. He certainly did not make any sort of positive contribution to our affairs.
Unfortunately, it is all in pattern with hon. and right hon. Gentlemen opposite at the present time. Take, for example, last evening in this Chamber. The hon. Member for Fulham (Mr. M. Stewart), no doubt on the authority of the right hon. Gentleman, said, "If we get back to power at the next election within a year we will reform local government in London." He did not say how. He did not make any positive proposals. No doubt he says to himself, "Well, we will think of something on the day, but at the moment we have not got any proposals to offer, but we will reform all local government."
The day before the hon. Member for Coventry, East (Mr. Crossman) and the right hon. Member for Belper (Mr. G. Brown) introduced a great insurance scheme which is going to remove poverty from the people. Was there any suggestion how that is to be paid for, any suggestion of the cost? Not one iota. What does the hon. Member for Coventry, East say when he talks about this? To quote his own words, he said:
The last time I introduced a scheme like this the Tories shot it to pieces and we are not going to let that happen again.
There again, no doubt, some time in the future, just about the time of an election, the Labour Party will come up with some sort of vague plan which it will hope will get the party by the electorate. It failed last time and it will fail again.

Mr. Willis: Wishful thinking by the hon. Member.

Mr. Cooper: Take the National Health Service. I can remember people in the Labour Party telling the electors, "Of course, we brought in the National Health Service. We thought this up. We started the thing going and our estimates were first-class. We told the country when we introduced the scheme it would cost £150 million." To show how accurate were their estimates, today it costs £1,000 million. So we are told that is because of the way the wicked Tories have destroyed the National Health Scheme. This is the sort of nonsense which we get from the right hon. Gentleman and his hon. Friends day after day and month after month and that is the way in which they hope they will govern the affairs of this country—if they are given the opportunity.
The right hon. Gentleman this afternoon twitted my right hon. Friend the Chancellor with this "sudden" concession to under-developed countries and said, "Two years ago we in the Labour Party enjoined this sort of thing upon the Chancellor." One or two hon. Gentlemen, I notice, are nodding their heads sagely. I made the first speech on this subject three years ago in a Whitsun Adjournment debate, which was replied to by the then Economic Secretary to the Treasury. I am very glad to see that there are hon. Gentlemen opposite who have suddenly become converted to the idea that we ought to do something for the under-developed territories.
I compliment my right hon. Friend on his Budget which, without wishing to use exaggerated language, I think was the most imaginative Budget that we have had for many years, especially in its particularisation of areas for special tax concessions. I do not recall this being done before except with regard to individual industries such as the shipping industry, but here we have whole areas which are to be considered for special reliefs. This is a remarkable transformation in our approach to taxation, and I think that my right hon. Friend ought to be congratulated on it.
Very much of what is happening today would not have been possible had it not been for the firm approach to our economic problems which was adopted by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). There is no doubt that forcing on the country the fact that an incomes policy was essential, that some sort of development programme was vital and that we could only have increased incomes out of what we earned, brought a great deal of unpopularity to the Government. But this was, nevertheless, the right policy to pursue, and it is because we now have the situation in which the trade unions and members of the community recognise these basic facts that my right hon. Friend is able to do what he has done. We have set up N.E.D.C. and N.I.C. and I am convinced that one day the Labour Party, who criticise and laugh at this Development Council, will be forced to accept that it, or some refinement of it, is vital if we are to get together and work together to bring our country through the difficulties which face us.
I thank my right hon. Friend for his promise with regard to light oils, and here I must declare an interest. This is something for which I have been working for many years. This tax has been a great burden to the chemical industry ever since it was introduced. I assure the hon. Member for Romford (Mr. Ledger) that there are technical problems which make it difficult to deal with this in one fell swoop. These technical difficulties are concerned with the specific gravity of the material and its flashpoint.
These difficulties arose because of the way in which the tax was originally introduced, but it should be possible very


quickly for the Customs and the Treasury to bring in some relief, because we have reached the farcical position that British industry, because of this tax, cannot compete in this country with imported goods. I repeat that this is a farcical situation, and my only criticism of my right hon. Friend and his predecessors is that this position has not been appreciated before now, and that action has not been taken to deal with it.
Although I understand the reasons for it, I am sorry that it has not been possible to make any concession with regard to fuel oil. I should have thought that it would have been possible to make a reduction in the tax on oil used for transport. My right hon. Friend this afternoon used the argument that he did not wish to interfere with the development of the coal industry—and, of course, everybody subscribes to that as a policy—but however much one develops the coal industry, one cannot drive buses on coal, and surely it would have been possible to have a differential tax which would have given public transport the benefit of fuel oil at a lower cost? This would have helped to lower the cost of transporting goods by road and to stabilise bus fares, without being in any way inflationary.
I come next to the question of exports, and I suppose we must recognise that in the long term the Budget will be judged by its effect on our efforts in the export trade, because only by increasing our exports can we provide the wherewithal to buy raw materials and thus increase domestic consumption. My right hon. Friend has made some useful concessions, but it is not only to tax concessions that we should look for assistance in our export trade. I am severely critical of the Board of Trade and its assistance, or, as I like to think, lack of assistance, to exporters.
There does not seem to be sufficient dynamism in the Board of Trade. I have asked many Questions on this subject, and I have never been satisfied about the general standard of ability of commercial councillors or trade commissioners who are under the control of the Foreign Office. That is not to say that the gentlemen who undertake these duties are men of below average ability. They are not, but, whether we like it or not, the fact is that the average commercial

councillor or trade commissioner regards this job as the first or second step in the ladder to a diplomatic career, and I have always believed that the men for these jobs should be chosen from the higher levels of industry and paid a substantial salary to do them. They should be responsible for looking after the interests of British industry in the countries to which they are posted. They should be responsible to the ambassador or whoever is our representative there only from the point of view of discipline. Let us not be under any illusion. It is only by the development of our export trade that we shall live and prosper, and it is only by getting an adequate service from our officials overseas that British industry can be properly served.
Secondly, I am not happy about the statistics which we receive either from the Treasury or from the Board of Trade. Generally speaking, they are behind time to the extent of several months, and often industry is given information which has been so overtaken by events that wrong policies are pursued. Although I agreed with the Budget presented by my right hon. and learned Friend the Member for Wirral last year, it could be said that had he had really up-to-date statistical information some of the policies which he carried through would not have been carried through, that other policies would have been produced and that we might have found ourselves in a different position towards the middle of last year. I should therefore like my right hon. Friend to consider the whole question of Government statistics, particularly in so far as they relate to industry.
I have three substantial companies in my constituency—the Plessey Company Ltd., Ilford Ltd. and Howards of Ilford Ltd. They all have great achievements to their credit in the export field. They have achieved great things in the face of the most energetic competition from companies all over the world. One of these companies is exceedingly prosperous and is doing more and more trade each year. This expansion can be carried out if management and unions work together in an effort to achieve the results which we all know can be obtained.
The future for this country is great. The indecision of the last eighteen months, arising from the Common Market discussions, is now behind us. We


have to stand on our own two feet to earn our living in a hard world, and I believe that the brains and skill in this country will enable us to do that. I think that my right hon. Friend has introduced a Budget which will go down as one of the great turning points in the economic and social history of this country, and the interesting thing is that the speeches which we have heard from the other side of the Committee have been favourable to my right hon. Friend.

7.21 p.m.

Mr. R. E. Winterbottom: The hon. Member for Ilford, South (Mr. Cooper) is right when he argues that Britain's future lies in the success of her export trade. There is a future for Great Britain. I cannot see it under the present Government, but nevertheless I believe that to be the case. It is only when the hon. Gentleman starts criticising the Labour Party—which seems to be a characteristic of most of his speeches—and says that the Labour Party will come out with some great plan presumably to "kid" the public that I part company from him.
If I wanted to argue about the Chancellor's speech today along those lines, I could say that hardly a newspaper in the country has not prophesied that in this Budget there would be something in the nature of a big "give-away" by the Tory Party to check its waning fortunes. But I am not going to do that. I am going to congratulate the Chancellor on an excellent Budget statement. I think that it is the best statement that I have heard from a Chancellor of the Exchequer since I first came to the House, and there are certain things which I particularly like.
In common with many of my hon. Friends, I like the reduction in Income Tax. I like the abolition of the Schedule A tax. I like what the Chancellor has done in regard to Stamp Duty. But, having said that, I want to add that liking all these things does not mean that I think they are right. It is possible to like something that has been done and yet question the wisdom of doing it. This question may be asked of a Budget that gives away practically the whole of last year's surplus. It can be fairly said that that is not a wise Budget in view of our present economic condition.
The Chancellor must realise that this country is losing in the export race, referred to by the hon. Member for Ilford, South. Over the past few years we have not reached the average increase in production that the Chancellor referred to as being the basis of his Budget statement today. We are losing to almost every one of the heavily industrialised countries in the world. It is questionable whether it is wise to use the previous surplus as a "give-away" when future circumstances may prove that it was not warranted. Although I must admit that the Chancellor's statement is probably the best that I have ever heard from a Chancellor, I do not think that it is possible to put a new patch on an old coat. The problem with which the Chancellor has been dealing in this Budget is exactly the same as that which, over the past few years, has caused grievous unemployment. He has been co-responsible for the contraction policy of the Government that has created heavy unemployment in some parts of the country. He has been a member of a Government who have pursued a policy of dear money, to the detriment of industrial development in the depressed areas.
In some ways I welcome the Chancellor's statement, but if it is put in its proper perspective I must question whether it is a wise Budget for these days, especially with heavy unemployment. The tax concessions really do nothing to narrow the gap between the rich and the poor—an operation which should be a cardinal principle of British economic justice.
I now want to refer to some of the specific items in the Budget. One of the main proposals of the Chancellor is to allow certain percentages for capital development and new plant and machinery in the depressed areas. I agree with the Chancellor that many districts not yet scheduled as depressed areas are almost cheek by jowl with depressed areas. They will not be affected by this capital depreciation concession. In Lancashire, for example, Liverpool is scheduled as a depressed area. Any industry in Liverpool will benefit from this concession, but other districts in Lancashire which are almost as hard-hit as Liverpool and are not yet scheduled as depressed areas will not


benefit. Difficulties may arise between districts which, although similarly affected by unemployment, are given different treatment under the proposals of the Chancellor.
Many of my hon. Friends will welcome this concession by the Chancellor. It must be remembered that capital depreciation is a business asset. Considering the matter from that angle, I cannot criticise the proposal. In the long run it is possible that it will do some good, if only a limited amount, to depressed areas. I question whether this concession has come quickly enough to correct the imbalance that is now existing between the depressed areas of the North and the more prosperous areas of the South.
I do not object to capital depreciation allowances, but I question whether this concession now will be as valuable to industry as it would have been had it been made just over twelve months ago. It would have been better for the Chancellor to have corrected the imbalance between the North and the South which has been responsible for employers seeking location for new industries in the South.
What attracts a man to bring industry to the South-East when there is land available in the North, Lancashire, Yorkshire, Durham, Tyneside, Tees-side, Scotland, and Northern Ireland? Why does he come to the South? In almost everything that matters to the man who is deciding whether his business will prosper in the South as against the North, the advantages are in the South. There are cultural values in the south-east area. There are good theatres and the best actors and actresses who will not go to the North because the people there cannot afford to pay for them. The subsidies which the Chancellor gives to the South are £900,000 as against £300,000 in total to the Midlands, Scotland, the North, Northern Ireland and Wales. Every hospital bed in the north of England costs less, and has to cost less, than every bed in London. I could go through the whole list of amenities and provisions in the South that ultimately make an attractive picture to the man who is planning his industry.
If the Chancellor tackled this problem from that point of view, results might be much better than they will be by

giving this concession to capital development, valuable though it may be in the course of time. I would tell the Chancellor, who argues that the basis of his Budget is one of expansion, that expansion is not always achieved by providing new machinery for capital development. This country at present could make 30 million tons of crude steel. The factories are there and the machines are there. It has the most modern and up-to-date machinery in the world.
Steel is now the best barometer of the economic prosperity or failure of Britain. Once it was coal; now it is steel. What are we doing with that capacity to make 30 million tons of steel? We have the machines and the men. The machines are partially unemployed and some of the men are totally unemployed. Last year we used 20·6 million tons of crude steel when we could have produced 28 million tons. That was less than it was the year before. It was less than it was in the year when the present Prime Minister came to office. It is true to say that if steel is the barometer of the success or failure of the British economy there has been a diminution in the British economy ever since the Prime Minister took office.
It is not always a case of subsidising new machines but rather of so regulating and influencing the affairs of the country that work is found for its people and directing industry to the places where there is absence of work. In this way we can build up industry that not only provides for the home trade but which can, with the encouragement of tad Government, cater for the export trade of which the hon. Member for Ilford, spoke.
This is the paradox of the situation. It is the great service industries of this country that we nationalised and which we want to be the basis for the development of goods both for the home market and the overseas market—those industries that we thought would be able to supply all industries, whether private or public in this country, in order to build up the prosperity on which we base our conception of full employment—that are today being so denuded of Government help, and, indeed, so directed by Government decree that out of the ordinary yearly revenue received by way of the goods that they sell an abnormal


amount has to be given to capital development.
In the case of electricity, it is 58½ per cent., and in the case of the Post Office something over 60 per cent. Those industries, with Government help, run as many hon. Members opposite run their own industries, with a proper balance between revenue and Government loans at cheap rates, could have done much to provide the necessary work in the depressed areas.
Although I appreciate the rather wonderful speech made by the Chancellor and the challenge that was contained in almost everything he said, I do not believe that his proposals will provide the prosperity that will place Britain one again in the forefront of the industrial nations of the world, help us to meet world competition in terms of equality and give employment to our people.

7.40 p.m.

Mr. Stratton Mills: The hon. Member for Sheffield, Bright-side (Mr. Winterbottom) dealt vividly with the problems in the areas of unemployment in the north of England similar to those we have had in Northern Ireland for many years. I do not agree with much that the hon. Gentleman said, but there are several points on which one might find common ground with him. Later in my speech I propose to discuss the problems of areas of unemployment and, with the permission of the Committee, I will deal with the hon. Member's points then.
The atmosphere in the Chamber after the Chancellor has made his speech is always very special. There is a tremendous build-up to the speech and then after he has departed, hon. Members who are left find that the experience of speaking in an almost empty Chamber is quite unique. There are many days in the year when there are few hon. Members in the Chamber at a given time. But after the Budget speech there is a special atmosphere. There is the advantage that if an hon. Member mislays his notes other hon. Members tend to be tolerant because they realise that the hon. Member who is speaking has been constructing his speech as he sat listening to the Budget statement.
I was glad to note that all hon. Members opposite who have spoken have, in broad terms, given a welcome to the Budget statement and have said that they regard it as a necessary Budget at this time. I wonder how rare have been the occasions in the last 18 years when there has not been a Division on one of the Resolutions put to the Committee after the Chancellor's statement. I welcome the Budget, but I will not bore the Committee by detailing all the points to which I extend a specific welcome. I certainly welcome the tone of my right hon. Friend's statement. I consider that it was the tone of his statement rather than any specific item which commended it to most hon. Members.
The theme of growth without inflation will be widely welcomed. It is easy to use that phrase, but is it possible to achieve that aim? What will be the annual rate of inflation from following such a policy? How soon will it be before we have a balance of payments crisis? I do not wish to be unduly pessimistic, but these matters represent a definite risk which any Chancellor has to take in pursuing a policy such as has been advocated. I am convinced that it is worth taking that risk and certainly those in the areas where the rate of unemployment is high believe strongly that the risk is worth taking.
One problem with which I wish to deal, and which concerns our whole approach as a country, is the future of the sterling area. I am not an economist, but I am passing on to the Committee the views which have been expressed by Mr. Andrew Shonfield in an excellent book on British economic policy since the war. Mr. Shonfield puts the point forcibly and convincingly that the rôle of the sterling area has changed since the war. Formerly we were a deposit bank. Now we have become an investment bank. Generally speaking, the old Commonwealth countries are debtors and the fast-developing countries in the Commonwealth are creditors. It may be argued that those countries should spend more of their accumulated wealth on developing themselves. This is gradually taking place and the new developing Commonwealth countries are starting to abandon the practice of leaving large sterling balances in London. Thus, the whole rôle of the sterling area will be altered.
The considerable potential strain put upon our balance of payments by the withdrawal of funds from the sterling area has been one of the main causes of the economic crises since the war. One hears the argument that on balance the City of London benefits from our rôle as banker for the sterling area. I wish to quote to the Committee what Mr. Shonfield says about this. He argues that what was in the past a substantial benefit to the City of London from our rôle as banker for the sterling area has now become marginal. He writes:
All told, the loss might, therefore, be of the order of £40 million. But that would still leave over two-thirds of the total estimated £125 million of foreign exchange earnings of the City of London intact. The amount lost in the course of putting some armour on the pound sterling and withdrawing the country from a number of activities, which render its economic life intolerably exposed to international pressures, is about 1 per cent. of Britain's annual income from the export of goods and services.
As I said earlier I do not claim to be dogmatic on the subject. I am merely putting to the Committee views in this book and which appeared to me convincing. I do not believe that it would be possible for us to have a policy of growth without inflation, and without balance of payments crises, unless and until there is a radical reform of the whole rôle of the sterling area; though this is one of the ideas in politics, like deflation, which is almost a dirty word. I feel there is a strong case for a study to be made by the Treasury of the whole rôle of the sterling area.
I wish to turn now to a subject which has nothing to do with the rôle of the sterling area but relates to the effect of the Budget proposals on young married people. I cannot help feeling that, from the point of view of young married people, there is something a little disappointing in the speech of the Chancellor. In the first year of marriage young people experience considerable financial strain, and particularly now that they are marrying at a younger age. They are faced with the expense of putting a deposit on a house and meeting the cost of furniture and carpets. Many people have argued the case for a reduction in Purchase Tax and similar schemes, but I should like to see a scheme which would provide, in addition to those reliefs that a certain amount of the income of

the couple would be exempt from tax for the first year of their married life, or perhaps for the first and second years, as a form of additional marriage allowance. This scheme might be an inducement to matrimonial happiness if it could be granted only in the first year of the first marriage.

Mr. Simon Mahon: Why only in the first year?

Mr. Stratton Mills: The hon. Gentleman asks why only the first year. The idea would be that it was a special allowance to help people getting married and it might be given for the first and second years, but my point is that it would be a special help to those young people getting married.

Mr. T. H. H. Skeet: Marriage allowances have gone up very substantially, not only for the first year but for all succeeding years.

Mr. Stratton Mills: I appreciate that, but my point is that there is something to be said for having a special allowance of which one could get the benefit in the first and second year of marriage especially to help to meet these extra expenses.
I turn to what the Chancellor said about areas of high unemployment. I wish to emphasise that what he said will be widely welcomed in all areas of high unemployment in Britain. Every bit as important as the special measures he announced was his statement of his aim to provide growth and get the economy moving. Both those things will be widely felt. Above all, it has been shown by the Chancellor's speech that there is substantial new thinking on the Treasury Bench about how to help areas of high unemployment. The approach goes beyond the Distribution of Industry Act into a more positive sphere and I certainly welcome that advance.
It was said some months ago that £10 million aid to undeveloped areas will be tied to products from areas of high unemployment. That is to be welcomed, but I have not yet heard an announcement of any products from Northern Ireland being included in the scheme. I hope that it will be possible for the Treasury to say that products from Northern Ireland are to be included. Not only from the employment point of view should we like to be associated, but we think this a very worthy idea and we should like


to be linked with the scheme on those grounds also.
The central part of what the Chancellor said in this field was the free depreciation scheme for writing off equipment and fixed plant at the will of a company. This will be a very complicated scheme, and I confess that the detailed difficulties and advantages will be such that most of us who are not accountants will be able to appreciate only when we see the Economist at the weekend or the Financial Times tomorrow. Looking at the proposals for the first time, it seems from the point of view of Northern Ireland to be a most welcome and imaginative measure, probably much more imaginative than anything which has been put forward by the Government to deal with areas of high unemployment since the time when I entered the House in 1959. I have long been convinced that we have gone as far as possible with inducements under the Distribution of Industry Act and corresponding measures in Northern Ireland, and if we are to make further progress it was essential that there should be some form of taxation incentive.
My colleagues for Northern Ireland constituencies and I put forward a similar scheme to the Prime Minister when we saw him in January and to the Chancellor when we saw him before Christmas. We put it in a memorandum which I had the honour of preparing on behalf of my colleagues to the Hall Committee on Northern Ireland's economy. In that Report, dealing with the whole field of tax differentials between areas, the Treasury experts argued most convincingly that there were great problems and administrative difficulties in giving special tax incentives to areas of high unemployment. I am glad that those have been overcome. This is a revolutionary break through. It is the first time that the principle of tax relief for special areas has been conceded. I can assure my right hon. Friend that it will be widely welcomed and much appreciated.

Mr. Cyril Bence: We have enunciated that principle from this side of the Committee for years.

Mr. Stratton Mills: I believe that it will be an effective measure and, spread over the years, it will do much to help areas of unemployment in getting their economy moving once again.
This is a well-balanced Budget. The right emphasis has been put on incentives. Above all, it is a fair Budget. It is fair between areas of high unemployment and areas of prosperity. It is fair between high income groups and low income groups. It shows a way ahead which I think our party can follow and which will be widely welcomed throughout the country.

7.56 p.m.

Mr. Dan Jones: I do not join with other right hon. and hon. Members in congratulating the Chancellor of the Exchequer today. I want to say precisely why. During the years I have admired his ability—that was evident today when he produced his Budget—but I feel entitled to say that there is a difference between ability and a degree of social and political morality.
In December last year I heard the Chancellor say in the debate on un-employment that if he had to choose between inflation and expansion, which we on this side of the Committee then advocated, he would come down against inflation. For that reason he did not support the measures we advanced at that time. That was only a few months ago. As a consequence, one is driven to ask why the Chancellor has come forward today with a completely different line of thinking.
Can we accept that this is because there is a new morality in the Tory Party, or is it because hon. Members opposite want to boost their own party fortunes? One is entitled to pose that question. I have such a regard for the Chancellor's undoubted ability that I choose the latter and suggest that he was seeking to boost the morale of his party rather than the economy of the nation. I cannot subscribe to the thinking that what he clearly wishes to do today he did not see in December last year could be done then. The Chancellor is far too wise a man ever to make a faux pas of that description.
Like all other hon. Members, I should like to sit back and think this Budget out in more precise terms, but there are certain aspects of it which even now appear to be such that the Chancellor ought to think about them again. I believe I am right in saying that he said this was an expansionist Budget—we all agree with him that it is—and this expansion was based on the co-operation


of employers and trade unions. We ought to note his words very closely. He did not say "the continued co-operation of the trade unions". He left the impression—certainly in my mind—that what he is seeking now has not been forthcoming from the trade unions. By making that inference he was most un-kind to British work people.
I have a set of figures which the Chancellor might well study. Incidentally, they are drawn from The Times. They are quite relevant to this period for they were published on 5th January. The Times article, referring to the effort and efficiency of United Kingdom and European workers, said that the average Briton produces goods worth £506 per annum, the average West German produces goods worth £493 per annum, the average Belgian produces goods worth £504 per annum, the average Frenchman produces goods worth £489 per annum, the average Dutchman produces goods worth £378 per annum and the average Italian produces goods worth £253 per annum.
Because of these figures and because of this source—The Times is a most reputable and dependable journal—one comes to the conclusion that the British workers are playing a full part and that it might have been better had the Chancellor given these people a pat on the back rather than say that his plans now depend on their co-operation. The truth is that that co-operation has already been forthcoming.
Nevertheless, I was particularly pleased with the Chancellor's apparent desire, which I assume will be supported by the Government, to expand our technical training. This appeals to me very much because in the end it does not matter how we juggle with figures; unless we produce goods at the right price at the right time, of the right quality and with the right selling agency, all the figures will fall into disrepute. For that reason I say that I heartily subscribe to the Chancellor's plans in this respect.
But, again, I find myself at variance with the Chancellor. It was in 1958 that I led a deputation to the Chancellor asking him to reconsider the closing of a factory in Wales. He was then President of the Board of Trade. The factory pro-

duced machine tools. I was particularly attracted to it because, apart from a sprinkling of good, skilled engineers, a large proportion of the staff were disabled miners who were earning a good living and making a fair contribution to the nation's economy. That factory closed down, and the present Chancellor said that it had closed down because there had been no demand in the country for the machine tools which these people produced.
I want to draw the Committee's attention to what happened, because the figures disturb me. In 1959 we were importing 351,671 cwt. of machine tools at a cost of £16,526,441. This was about the time that I was told that there was no demand for the goods produced by these people—men who were sound economic units and were making a solid contribution to the nation's economy—and at a time when the Chancellor, as President of the Board of Trade, told me that the factory must close down because the demand did not exist.
I ask you, Mr. Thomas, to keep those figures in mind and to come with me to 1962. We find that the import of machine tools has risen to 573,539 cwt.

Mr. Skeet: What was this firm producing and what type of machine tools were being imported?

Mr. Jones: If the hon. Member permits me to continue I will come to that point. Having spent some twenty years in the engineering industry, I claim to know the relevance of these figures.
The hon. Member was not quite fair. I wanted to quote the increase in the cost to the nation, and if he thinks about these things he will be as interested in the figures as I am. The increase was from £16,526,441 to £32,257,385. This was almost double, and it was after a time at which I had been clearly told by the man who will undoubtedly earn the plaudits of the nation, both for his ability and for his social and political morality, that there was no demand for these machine tools. Is it to be wondered that, with this experience in mind, I cannot altogether join in the hallelujahs. While I still say that the man undoubtedly has considerable ability, I cannot possibly associate myself with all these hallelujahs.
The unemployment position in the North worries us and is apparently now worrying the Government. If I heard the Chancellor correctly, he spoke of the removal of old buildings and used the term "dereliction". I heartily applaud the removal of old buildings, which is certainly necessary. He said that the benefit from this much overdue reform would be felt by Scotland, the North-East, Northern Ireland and other areas which are scheduled as development areas. I want to put in a word for the north-east Lancashire belt. These areas have a very high level of unemployment. Heaven knows, they have enough ugly buildings which need to be removed in order to make way for much better social as well as industrial facilities in order to attract new industries.
If I understood the Chancellor correctly, we shall not be included in his proposal. I therefore hope that he will think this out again and will include areas of high unemployment whether scheduled or not. If he does not, I am afraid that these areas will suffer an injustice. I hope that he will remember that it is not only a question of removing ugly buildings and that he will spend more millions on roads and hospitals in the North, for both are vital in the belt to which I have referred.
May I ask the Economic Secretary seriously to consider a point concerning the spending of perhaps £200,000 to great social and economic advantage? In the area to which I have referred, Questions to Ministers have revealed that there is a greater number of disabled people than in many areas. I therefore ask the Economic Secretary to see whether it is possible for us to have an industrial rehabilitation unit placed in the belt. I can assure him that information which I have obtained from Questions shows that the nearest unit is Aintree, in Liverpool This does not serve the area in question because the distance is too great. In most cases these people are very seriously disabled, but they would respond to the provision of facilities in this area if they had to travel up to a few miles. There are those who have said that one judges a nation by the way in which the nation treats its old people. This might be a fair yardstick to apply in this respect. I ask the Chancellor seriously to con-

sider this point when he is cringing under the hallelujahs which will be poured on him for his Herculean effort today.
The Chancellor of the Exchequer—quite correctly in my view—placed great emphasis on exports. Anyone who did not agree with the right hon. Gentleman on this point would be extremely foolish. We are nothing if we are not a manufacturing nation. Our ability to manufacture depends entirely on our ability to buy raw materials in the world market. We must always remember that raw materials have to be paid for. In short, we earn our living in the world.
In addition, could not the Chancellor of the Exchequer consider selective imports? Again I speak for my own part of the country—Lancashire. I do not apologise for doing so. I have said these things before, and I shall continue to say them as long as I am privileged to come here. There is a vitally important industry there which since 1959 has been almost desolated by what I describe as the foolish economic policies of the present Government, who carried out a vast amount of rationalisation, spent millions of pounds of public money, and as a consequence allowed the industry to stagnate. The owners of some factories lent themselves to this scheme and spent hundreds of thousands of pounds on machines, but today they are idle. If that is sound economics, I am a Dutchman. These are the economics of a madhouse. The Government encourage people to buy machines and then let them remain idle.
If the Government are sincere in their concern for the North-East, of which Lancashire is an integral part, they should consider selective imports of cotton textile goods. Anyone who is prepared to study the matter knows that this country buys about 30 per cent. of its consumption from abroad. In this respect we are dissimilar from the United States and any European country which is, like ourselves, dependent to some degree upon the cotton and textile industry. The United States imports only about 6 per cent. For Europe the figure is 2½ per cent. to 3 per cent. I do not advocate that we get down to those levels.
After all, we have our Commonwealth arrangements which we should be prepared to honour. However, a cut of 10


per cent. would be permissible and would be a tremendous help. I am inspired to make these remarks because at the Commonwealth Parliamentary Association annual meeting at Lagos in October of last year I raised with Commonwealth Members of Parliament and Commonwealth Ministers the question of the Lancashire textile industry. I speak the truth to the Committee when I say that when I told these friends that as a result of our imports one of Lancashire's industries was rapidly stagnating they would not believe me. They thought that I was guilty of exaggeration. They told me definitely that that was more than they would expect from anyone.
I am keen for Commonwealth trade. However, if charity is a fine human trait, it is no less fine in economics and industry than it is in human relations. We take a very dim view of the fact that a man can be solicitous to the woman next door and beat his own wife.
I cannot bring myself to join in these hallelujahs, because there are certain defects in the Budget. I hope that as a result of my brief contribution some of the defects which affect the people I am proud to represent will be put right.

8.15 p.m.

Mr. T. H. H. Skeet: The hon. Member for Burnley (Mr. D. Jones) always makes a very genuine speech and speaks with considerable feeling. As he said, my right hon. Friend the Chancellor of the Exchequer said that he wanted the active co-operation of all sides of industry, including the trade unions. This is absolutely indispensable. Unless we have the support of the trade unions and every side of industry, this country's future, whether chartered or otherwise, will go by the board, as the hon. Member appreciates.
This is an expansionist Budget based on the assumption that all parts of the country will co-operate. I have one anxiety. This Budget will obviously be a very popular one in the country, but will it be construed by the public as in fact a stimulus, as denoting a need to get down to hard work to ensure that the country comes out on top of its very great difficulties?
The Report of the National Economic Development Council lays down the

prospects for us between now and 1966. There is a certain amount of crystal gazing in this, because paragraph 321 contains this rather unique assessment:
Any temporary worsening of the balance of payments for these or other reasons should prove manageable provided the rise in money incomes and prices can be sufficiently restrained and our competitive position improved, and provided economic and political developments in the rest of the world are not unfavourable.
Nothing could be filled with more provisos. The statement really is that, if all goes well, we will be in a satisfactory position in the United Kingdom.
My right hon. Friend the Chancellor of the Exchequer recognised that the position of sterling is sound. We have been through some very trying times. In the correspondence columns of The Times, the Financial Times, and elsewhere, some writers have indicated that the £ should be devalued. I think we should say here and now that that would lead to a breach of faith. It would not be the right course for this country to take. The right hon. Member for Huyton (Mr. H. Wilson) stood at the Dispatch Box and said that this is the Government which gave money away. In the period when his party formed the Government up to 1951, they gave little money away. In fact, they called money in and devalued the £ in September, 1949 Then the Labour Party gave way to the Conservatives to take over in 1951.

Mr. D. Jones: Mr. D. Jones rose—

Mr. Skeet: When I have finished I will be able to give way to the hon Member.

Several Hon. Members: Several Hon. Members rose—

Mr. Skeet: I will give way as soon as I have finished my little assault on this point.
We have been brought into the situation following a particular set of circumstances. Certain restrictions were imposed and the £ was devalued in September, 1949—which I am not advocating; and I will explain why later. Thereupon, the reins of Government had to be handed over to the Conservatives. In the course of the years while the Conservatives have been in power they have faced up to an important principle. Money has been allowed to fruitify in the pockets of the people. This year's Budget, therefore, is


catered to meet a situation which, as the right hon. Member for Huyton indicated earlier, calls for a reflationary Budget.

Mr. D. Jones: The hon. Member has referred to the Labour Government of 1945 to 1951 and the fact that we devalued the £ at that time. The hon. Member, like so many of his hon. Friends, will not remember what the right hon. Gentleman the Member for Woodford (Sir W. Churchill) said in 1945 about us being a bankrupt nation. It is much more difficult to adjust the economy in those conditions compared with the situation which exists today. I hope that the hon. Member will bear that in mind.

Mr. Skeet: If we were a bankrupt nation it was an extraordinary way for the Government to have attempted to get us out of our difficulties by nationalising more industries.

Mr. Bence: The hon. Member is making an interesting point and he rightly says that the Conservative Government of 1951 pursued a policy of allowing money to fructify in the pockets of the people. Would he care to say what the value of the £ was in 1951, while the money was fructifying, and what it is today?

Mr. Skeet: I can only guess, but I think that it has gone down in value progressively since 1945. If the hon. Member studies the diagrams provided by The Times each year he will see that it has been going down progressively.
The average man has been receiving more all the time. The man in industry is much better off today than he was in years gone by, even with the present value of the £, and there has been a general redistribution in this context. I agree that people on fixed incomes have perhaps not been as well off as the average man in the street—the steel worker and those employed in the manufacturing industries.
As to devaluing the £, no policy could be more ill-advised for the United Kingdom than to follow such a course. It has been recommended by several writers in the national Press. While it might temporarily assist our exports it would make our imports much more expensive and, as we know from previous experience, we would be much

worse off in five or six years' time. The repayment of international loans would become more onerous, and for all these reasons such a policy must be considered extremely carefully.
I appreciate that my right hon. Friend usually has difficulties over sterling later in the year. He faces a certain amount of speculative activity now. The movement of short-term currency over the European and New York exchanges is causing the trouble. Nevertheless, Government machinery for dealing with these matters is much more satisfactory today than it was 10 or 15 years ago. Today we have the right to call upon a standby-credit of 1,000 million dollars from the International Monetary Fund. There is also the Basle machinery whereby the central bankers of Europe agree to stockpile sterling which may be funded against I.M.F. loans. There are other devices, including the bilateral "swap" arrangements between a number of countries and this, too, can be utilised to support our currency.
For all these reasons we can afford to move ahead, with adequate backing to our currency. Devaluation is not requisite—on the assumption, that is, that we are prepared to work hard and increase our exports in the time available to us. It would be extremely ill-advised if we did not utilise the effect of the Budget to get ahead.
I have one criticism at this stage. My right hon. Friend said that he had studied turnover taxes but was not convinced that they would provide a stimulus for exports. For this reason, he said, he intends to refer the matters to Gordon Richardson, who is, I believe, a merchant banker. This means that others will be considering this important matter. I gather that my right hon. Friend has indicated that he would like an urgent answer.
I should have thought that we have already had quite a lot of correspondence in City journals on this topic. If the main emphasis of the Budget is expansion—and we can only get that if we expand our exports—it is one thing to provide incentives on the home front and to our industries, but it is quite another to persuade them to export. It is worth bearing in mind that the TVA tax is one of the many turnover taxes at present used in Europe. Western


Germany, Italy, France, Holland and Belgium all have their own variants of the turnover tax, and one would have thought that with all this experience my right hon. Friend would be convinced of its value.
I dare say that my hon. Friend the Economic Secretary, who has had a great deal of experience in the City, may already be persuaded that this system could be brought into being, although he may have difficulties with the Treasury, which does not appreciate change. The Treasury may say, "We would have to get rid of Profits Tax", but the N.E.D.C., which investigated this tax and issued a number of reports—only some of which have been published—indicated that we would need a TVA tax of about 2 per cent. to replace the present Profits Tax, and that if we were to replace Purchase Tax we would need a TVA tax of about 5 per cent.
The whole question is, does it provide any incentive to the exporter? The French, Italian or German exporter will tell us that, quite apart from the psychological impact, this tax provides that spur because he knows that when he exports his goods he will get a rebate from his Government of the accumulated tax paid. In Western Germany there is a fixed rate of rebate, namely, 6·68 per cent., and the actual turnover tax imposed is a variable figure ranging up to about 4 per cent. In France, the exporter will get back a great deal of the added value tax that is accumulated over the period of production, which other people pay; he, at the end, will receive it. In Italy, he will receive back about 3½ per cent. or 4 per cent.
When we have the turnover tax operating in at least four or five European countries in which exporters find it a particular incentive, it is difficult to understand the Chancellor of the Exchequer saying today that he wants a little more experience of this matter. Further, when we find that the Common Market countries have decided to harmonise turnover taxes on France's TVA system, I should have thought that the evidence was overwhelming.
Hon. Members will appreciate that it is one thing to have a Budget and to provide an incentive, but the next thing is to try to get the country off the ground and persuade people that it is important

to export. My right hon. Friend has said that foreign investment is important. In this connection we should recognise that United States firms in the United Kingdom account for over 24 per cent. of our exports to the United States of America. American companies resident here also account for a very large proportion of our manufacturing exports. These are material factors, and I am very glad that the Chancellor is doing his utmost to attract investors to the United Kingdom, and to make full use of this facility in the plan to 1966.
How delighted I am to hear of the cancellation of Schedule A—that will help the man who has just got married—and whatever hon. Members opposite may say of my right hon. Friend's proposals, all they have to do is to examine the Financial Statement. From that they will learn that before the Budget a married couple with one child and an earned income of £800 per annum paid tax of £54 1s. 4d., which will now fall to £39 11s. 4d.—

Mr. Harold Davies: We can read those figures.

Mr. Skeet: But it is only right that the nation should read them, and it is right, too, that I should draw attention to one or two very significant points.
Hon. Members are prepared to say that there is a General Election in the offing when there is not, but they are not prepared to say that this is a good Budget —[Interruption.] The hon. Member for Burnley was rather doubtful about its value.

Mr. Harold Davies: Some of us are even more doubtful.

Mr. Skeet: In the case of a married couple with three children not over 11 years of age the amount of tax paid on £1,000 earnings was £40. Now it has fallen to £18 3s. 1d. In other words, throughout England, Scotland and Wales people will be better off, and because of the increased social insurance payments which will be made many others also will be better off as a result of the consideration shown by the Government.
As for the major problem of unemployment which we have to face, the Chancellor has introduced proposals which are novel, radical and, in certain ways, particularly modest.

Mr. Bence: Too late.

Mr. Skeet: My right hon. Friend, as I was about to say, has introduced proposals to enable an industrialist to write off at his own choice almost 100 per cent. of plant before he starts to pay tax. All that hon. Members opposite can say is, "It is too late", but at no time did they suggest a proposal of this kind.

Mr. Bence: We have been at it for years.

Mr. Skeet: We have been hearing this afternoon that the party opposite has been at this for a long time—since 1066, I presume.
Two things are to be considered. First, we must get the unemployment rate down. We have every confidence that we shall bring it down to below 500,000 by the end of the year.

Mr. Bence: Who got it up?

Mr. Skeet: We do not succeed in our purposes simply because we get the unemployment rate down. We must also get our export rate up. Therefore, we must have the machinery and tackle to do that. Fortunately, the Government have contrived the N.E.D.C., and I dare say that hon. Members opposite will say that that was thought of many moons ago, but it is not the case. The Government have brought the N.E.D.C. into operation. I hope that it will be supported throughout the country.

Mr. John Biffen: It was under my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) rather than the present Chancellor of the Exchequer that the N.E.D.C. came into being.

Mr. John Rankin: A private quarel.

Mr. Skeet: Anyway, it was a Conservative Chancellor who brought the N.E.D.C. into existence and that body has laid down proposals for the next five or six years which will give an idea of which way the country is going.

Mr. John McCann: We know.

Mr. Skeet: The Council has indicated 17 important industries which are likely to lead to expansion, among them machine tools, chemicals and motor car manufacture. The first thing for the public to realise is the course which we have to

take. The second is the importance of going in that direction, and the third the necessity of having an incentive to move in the right direction. I think that the Chancellor, therefore, is to be congratulated on the timing of his operations, on the method of putting them into effect, and on the moderation which he has shown at all times.

8.37 p.m.

Mr. Harold Davies: I am hungry. I have been sitting here for a long time. I do not want to quote figures which everybody can read tomorrow morning. I want to proceed by the Socratic method. First, was this a good Budget? Secondly, was it delivered ably? We know the Chancellor of the Exchequer, and, of course, it was ably delivered. If it were not, the right hon. Gentleman should not be Chancellor.
How was the right hon. Gentleman able to give away this money? It was because the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) got sacked for accumulating it at a time when the party opposite did not know whether it wanted a "stop" policy or a "go" policy. Now we have the elementary and puerile statement made that we want to reduce unemployment. As my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) asked, who got it up?

Mr. Bence: That lot over there, and where are they?

Mr. Davies: Yes.

Mr. Bence: They did it.

Mr. Davies: Look, my hon. Friend, is this a duet? A tenor and baritone duet, as I think somebody is suggesting?
Let us get a bit of commonsense into the discussion. The Tories are now claiming that they are wonderful people because they are solving the problem of unemployment. They have been in power for twelve years. They have been giving us the facts all mixed up. We heard another misrepresentation a little while ago. As the right hon. Member for Woodford (Sir W. Churchill) said, this nation emerged bankrupt from the greatest war in the history of mankind. Yet still the childish accusation is made that we on this side did not do miracles after that ghastly war.

Mr. Skeet: Mr. Skeet rose—

Mr. Davies: No. I am giving way to nobody. I did not interrupt anyone tonight. I want to speak for only about ten minutes, but I want my speech to be effective.
Now, the next question. Is this a Budget full of genius? Of course not. Every newspaper, every financial paper, national and international, from the Wall Street Journal to the Financial Times and the Economist, has been talking about these things and making suggestions.
We are grateful, of course, for some of the Chancellor's proposals, but how will the young married couple be helped because Schedule A has gone? Ninety per cent. of young married couples cannot afford the capital to buy a house at all; they cannot afford the deposit. A Chancellor preparing a really constructive and imaginative Budget might have put aside in the pockets of the Treasury £25 million or so to help young people who want to be property-owning democrats.

Mr. Skeet: The number of home owners has been going up.

Mr. Davies: Is the hon. Member interrupting again?

Mr. Skeet: Will the hon. Gentleman give way?

Mr. Davies: No, I am not giving way.

The Temporary Chairman (Mr. George Thomas): Order.

Mr. Davies: I shall not give way because I know the kind of questions the hon. Gentleman will ask.
The whole point is that if some such sum as £25 million—call it £X—were put aside to help young people, they could be encouraged to become property-owning democrats. The right hon. and learned Member for Wirral found the money. This would have been a stimulus to the building industry and would have given a proper sense of dignity to young married people who are now waiting without homes of their own because of the Rent Act and because local authorities cannot build, first, because of the Rent Act and, second, because of high interest rates.
This is where we could have had both realism and imaginative approach in the Budget. The Chancellor talks about helping society. One of the most dastardly

sins against society today is the extortionate, crippling, thieving robbery of land values. Yet nothing has been done.
I cannot understand what is the matter with half of my party, saying that it was a brilliant speech by the Chancellor of the Exchequer. The right hon. Gentleman could not do anything else with the money on the eve of a General Election but give some of it away. If he really wanted to help society, he could do something about site values, because this is one of the greatest evils today. Yet nothing whatever is done or suggested.
Now, another question. We have had a brilliant dissertation on aid to underdeveloped countries. Then we had a pompous declaration from the hon. Member for Ilford, South (Mr. Cooper)—I could not interrupt him because it was so childish—who said that he was the first in the House to talk about it. Good heavens! I remember studying Professor McMahon Ball's article on aid to the under-developed areas and making speeches in the House fifteen or sixteen years ago on the problem of economic aid.
Let us have the facts right. I will repeat them again. We were scoffed at for stressing them years ago. What is the crucial economic fact about aid to the under-developed areas? If we lend £5 million to Malaya, and on the London market tomorrow night the price of rubber drops by ld. a lb., that £5 million will be wiped out in a moment. The point is that unless there is stability in the price of under-privileged man's raw materials, such as rubber, cocoa, tin, copra and other things, economic aid from America and the Western world, or from anybody else, does not mean a thing. I will not develop that any more. One could speak for hours on it.
May I bore the Committee for a moment by making a short quotation? The National Institute of Economic and Social Research interviewed 140 companies in December, and the result of that is this—and the House and my party should mark it:
The most significant conclusion to emerge from the inquiry is the small extent to which unemployment among workers from the industries covered is likely to be alleviated by any growth in output. The engineering companies estimate that they could increase production by 10 per cent. before they would need to recruit any more workers, while a


25 per cent. rise in production could be achieved if the labour force were increased by only 10 per cent.
That is a point which my hon. Friend the Member for Burnley (Mr. D. Jones) touched on. It goes on:
Among the vehicle companies interviewed, the potential for increased productivity is even greater, Output could … be expanded by 15 per cent, with the present labour force and by as much as 40 per cent. with only a 7 per cent.
increase in the labour force. Those figures illustrate my point.
Man is suddenly confronted with a fact which was beginning to emerge in the early days of the Industrial Revolution. With the present magnificent automative methods of production, we are confronted with the fact that we have to plan. This is why I am a Socialist. It is not possible under the old competitive system to have full employment in the age of electronics and automation without some form of central planning. Today's Budget was a planner's Budget, and that is why I pay tribute to parts of it.

Mr. Rankin: Parts of it?

Mr. Davies: I said "parts of it", and I repeat it—parts of it.

Mr. Bence: It is like the curate's egg—good in parts.

Mr. Davies: Hon. Members opposite are forced to accept things which they have scoffed at for the last thirty years. We were scoffed at for saying that there had to be some public ownership. The social furniture of the railways is absolutely necessary. The fact is emerging that private enterprise cannot work without coming to the Government with the begging bowl and saying, "If you want us to support the North-East Coast, give us £50 million". They squirm about subsidies to council house dwellers, the under-privileged, and then smile when it is proposed to give £130 million towards manufacturers and industrialists. I do not begrudge it, because we are forced to do it. Industry today is not big enough to stand capital development without the Government being behind it. Why do not the Government admit it? [Laughter.] The hon. Member for Willesden, East (Mr. Skeet) must be a complete ignoramus for scoffing at that.

Mr. Skeet: Give way.

Mr. Davies: I cannot give way. Why should I?

Mr. Skeet: Then do not give way.

Mr. Davies: The hon. Gentleman should not make such silly remarks. This is a fact of our history—that it is not possible to make private enterprise work today without the taxpayer putting money into the capital investment bowl.

Mr. McCann: National assistance.

Mr. Davies: The paradox is this. The Chancellor of the Exchequer admitted today that £150 million paid out to keep the railways going was a terrible price to pay; he would have to cut it. He is not prepared to pay £150 million for the social furniture which we call the railways—and they are not Beeching's railways but the nation's railways. He told us what he proposed to give to industry to encourage it to provide employment in certain areas. Yet the railways will have 70,000 men out of work or redundant in a couple of years' time and maybe 150,000 in a few years' time. That is the idiocy of it. It is absolutely crazy. If we are to take industry to these places, are we to run their goods on the roads? How are places to be developed in the North-East when north of Leeds there are no railways?
It is time the Labour Party took over. If we do not do so quickly, the greatness that was Britain will be finished. The only way the Conservative Party can hope to gain a General Election now is by admitting that industry must be planned and that the old acquisitive society and the rough winds of competition do not work in this twentieth century world.
No Government today, unless there is international co-operation, can control such things as the value of the £ and the sterling balances, which at one time I spent a long while trying to study and understand. All these questions are outside the control of any British Government or any one Government. This brings me to the point made by the Leader of the Opposition. What we want is a world economic conference to look at the problems of the raw materials of under-privileged man in relation to the automated production of technological man. I hope that the Government—all credit to them if they do—will take the initiative in the coming year of calling together a world conference to study the massive problems facing man in the twentieth century automation age.
It seems that we have a good "horse" now. An outsider won the Grand National. Perhaps our "outsider" will be the next Prime Minister on his performance. Maybe his performance was on the back of the right hon. and learned Member for Wirral, but if it has done Britain good, we do not mind. The people must come before politics or party.

8.48 p.m.

Mr. John Howard: I shall not follow the hon. Member for Leek (Mr. Harold Davies) too closely. At the outset I want to say that I regarded my right hon. Friend's Budget as one which certainly rose to the occasion, and judging by the speeches made since, that seems to have been generally accepted. It was also a workmanlike Budget in its approach to the problems which had to be accepted as its framework.
We have heard a number of criticisms. Some hon. Members opposite have said that there has been a big "give-away", and the right hon. Member for Huyton (Mr. H. Wilson) referred to a "bonanza" Budget. I do not think either term really describes the Budget. Certainly, Schedule A has been abolished. It was a hang-over from the old days of easy tax collection by levying an artificial rental on any piece of property. Both sides of the House have for some time been pressing for its abolition, and we are now very pleased to bury it in this Budget. There has been an incentive to property owning. I do not agree with what has been said about young married people. I feel that many young married people who are buying their houses today will be encouraged by the abolition of Schedule A, which will reduce their annual outgoings.
The "give-away", if such it is, covers a very wide field. No particular income group has had a very large reduction in overall taxation. In fact, I feel that my right hon. Friend has spread the reliefs extraordinarily fairly. I was delighted to see that he gave further relief to the aged both by means of increasing the allowances for single and married people over 65 and by increasing the limit of age relief so as to allow income from savings up to £900 to be regarded as earned income. Another incentive to someone

buying a house or intending to save is the reduction in Stamp Duty from 2 per cent. to 1 per cent. and the raising of the level of the house purchase price below which there is exemption from the duty.
In my view, the Budget was set against the problem of increasing our exports and the problem of reducing unemployment. Those two objectives march hand in hand. To conquer unemployment and to increase exports we need further expansion, and hitherto one of the barriers to economic growth has been the unrealistically high level of taxes. My right hon. Friend this afternoon was at some pains to point out that although 53¾ per cent. was the nominal rate of taxation, in fact, when investment allowances were taken into account—and most heavy industry is able to make full use of those investment allowances—the rate had been effectively reduced to something around 48 per cent., a point which I think is well worth noting by industry, and, indeed, by the general public, when viewing taxes as a whole. After all, it also underlines the fact that the State has a share in profits to the tune of very nearly half and collects its share through taxation.
We possibly looked for some positive help for exports through reducing costs, and the duty on light oils has been mentioned by a number of speakers. I should like to have seen some reduction there, but I take my right hon. Friend's point about the coal industry. It would be a great pity at this time when the coal industry is making such enormous efforts to get into the black, having earned a small profit this year, if we were to set it back and make it less competitive by encouraging the use of oil fuel at this moment.
I am sorry, of course, that the tax on diesel oils was not reduced. This is something of a burden on those who travel by passenger transport, and the feeling is that perhaps bus fares might have been reduced had the tax on fuel oil come down in this Budget, but, again, I can appreciate that there are difficulties in segregating oil which is used for one purpose from similar oil used in another industry for a different purpose. I hope efforts will be made to devise some watertight scheme for making an allowance against fuel duty in appropriate cases.

Mr. Charles Loughlin: I want to ask only one simple question, for I am going to touch upon this matter if I catch the eye of the Chair. Is there not a difference in the type of oil which is used in diesel transport and other oils used for industrial purposes?

Mr. Howard: Oh, yes, I quite agree, but there is this overall picture of oil, particularly of the light hydrocarbon oil which, I gather, is rather difficult to isolate for one industry in particular. Earlier somebody—I think the hon. Member for Romford (Mr. Ledger)— referred to the use of light oils in the manufacture of polish, and, as I understood it, my hon. Friend the Economic Secretary intervened to say that in this instance efforts were being made to isolate this oil so that an allowance could be contemplated as soon as possible.
The possibility of introducing a turnover tax should give us an incentive in the export field since that tax clearly would not apply to any product which was sent abroad. I cannot help remarking that the collection of a turnover tax will present something of a problem, and we must avoid burdening the small shopkeeper and the small trader with the provision of information which he is not geared to supply.
Unless all retail sales are subject to a turnover tax, one can visualise the problem which will arise in a village store which sells everything from bread to fuel oil and whose only method of recording sales is ringing up the till as each customer comes in to pay his account. This type of trader will find it very difficult to analyse his sales and I hope that a burden of this sort will not be placed on him.

Mr. Skeet: Is my hon. Friend referring to a sales tax or to a turnover tax? A sales tax is cumulative right through the production stage.

Mr. Howard: I am talking of a turnover tax at the retail outlet.
Dealing with unemployment, the hon. Member for Leek was critical of the allowances which my right hon. Friend announced this afternoon. The allowances, in fact, cover a wider range than those referred to by the hon. Gentleman, and to which he attributed an allowance of £150 million.
Quite clearly some incentive is needed if industry is to move into the areas of

high unemployment and if industries already there are to expand in the way we hope they will. The two allowances proposed for the purchase of new plant or new buildings should be a decisive factor when firms are weighing up a site for any expansionist plan. A grant of 25 per cent. towards the cost of buildings, and 10 per cent. towards the cost of machinery, are material items in financing a new factory or new venture, and obviously the areas of high unemployment must be examined very closely before these allowances are waived aside in favour of building a factory or expanding existing works in the South-East.
In this connection—and I hope that I understood my right hon. Friend correctly—one should make clear that the tax allowances on plant which are to be given in addition to these grants, the equivalent to about 30 per cent., also mean that anyone moving into these areas of high unemployment can write off the capital cost at any rate of depreciation he wishes. This, too, is a great advantage. If a new development is being taken up one never knows for how long it will be successful. The ability to write off the cost of an asset against the initial profits is valuable incentive. If businessmen have a new venture about whose ability to sustain its profitability they may have some doubts there is every good reason now why they should go into an area of high unemployment.
The other week I asked a Question of my right hon. Friend in relation to an allowance against rates for those industries which moved into areas of high unemployment. I received a very curt answer, "No, Sir." It was thought not to be a very good idea. I am therefore pleased to see that a substitute for a rates allowance has been incorporated in the Budget, thus demonstrating that there is need to give positive financial encouragement if firms are to be persuaded to move into areas of high unemployment.
Another point that was canvassed before the Budget was the question of stimulating consumer spending. The Chancellor is reasonably satisfied that this is already running at a sufficient level, and that the small concessions given in the Budget should provide the added spending power—and saving


power, for that matter—which is necessary.
One item was of special interest to my constituency. I was pleased to hear my right hon. Friend's reference to the Rochdale Report, and his determination to press ahead with the modernisation and development of docks and ports. Southampton figures prominently in the Rochdale Report, which envisages a big future for it, based not only on the industrial area available within the perimeter of the town but also on its good fortune in having a deep-water port and nature's double tides, which give it a considerable advantage over ports elsewhere.
The increase in the allowance for industrial structures should also benefit the shipbuilding industry. At present dry docks are subject only to a 2 per cent. flat allowance. For some years dry-dock owners have pressed successive Chancellors to give an increase in this allowance. The point is that no plant allowance attaches to the enormous hole that has to be dug in the ground to accommodate the dock, or to the concrete and brickwork which goes into the construction of a watertight Jock. The normal rate of machinery allowance is attributed only to machinery operating the dock gates, and so on. This increase from 2 per cent, to 4 per cent. in the allowance on the dock structure is a step in the right direction. It does not go as far as the ports which wish to attract dry docks desire, but it shows that the Chancellor realises the problem.
In my constituency there are several firms interested in the extractive industries. If I understood my right hon. Friend's reference to these industries correctly, I gather that it is his intention to treat as stock-in-trade the cost of acquiring deposits relating only to minerals and not sand or gravel.

The Financial Secretary to the Treasury (Mr. Anthony Barber): It includes sand and gravel.

Mr. Howard: I am glad to hear my hon. Friend give that assurance. It will be a matter of some interest to operators in my constituency.
Before the Budget, most professional bodies—certainly the accountancy bodies—submitted to the Chancellor

proposals relating to the reforms they would like to see included in the Finance Bill. In particular, they referred to the streamlining of administration and the ironing out of a number of inequalities. My right hon. Friend has gone some way towards meeting these proposals, but in most cases he has done no more than acknowledge the fact that various problems exist. He has expressed the need to set up a committee, perhaps even a one-man committee, to inquire into the way in which these problems should be dealt with.
I have in mind particularly the amalgamation of Income Tax and Surtax. This seems to be an extraordinary relic from the days when the taxpayer did not wish the local inspector of taxes to know w hat his income was. He therefore exercised his right to send his return to the Special Commissioners, who also dealt with his income from the Surtax angle. Nowadays people are not shy about filling in their Income Tax returns. By proliferating these bodies there is a grave danger of errors occurring between the office of the Special Commissioners and the office of the inspector of taxes. In my Surtax assessments last year no less than eight errors emerged—nearly all resulting from information being slow to reach the Special Commissioners; but in one or two cases even emanating from simple errors in arithmetic which were perpetrated between the two departments.
The question of Surtax directions in respect of profits of private companies needs attention, and hope that my right hon. Friend will give it urgent consideration. It is difficult for a private company to decide upon its future unless it makes applications for Surtax clearances every year. If there were a more general instruction that the Surtax Commissioners would have power to decide what was a reasonable distribution of profits, industry would be far happier. At present it matter of all or nothing. Either the whole of the profits assessable are subject to direction if not distributed or, alternatively, if the Revenue fails in its efforts to assess the whole of the profits then none of them is assessed. This seems to ignore the facts of the situation.
The professional accountancy bodies have referred to capital allowances on motor cars. Arguments that the limit of motor car allowances should be abolished are not particularly popular


with hon. Members opposite. But it was rather ridiculous that there should be an artificial limit of £2,000 on the purchase price of a car. When my right hon. and learned Friend the Member for Wirral introduced this limit, he may have had in mind other considerations, but I think that most people who have to deal with the working of the tax system will agree that this limit is artificial and that it is as well to get rid of this fiction that a motor car should not cost more than £2,000.
In common with most hon. Members, I received a call from the local bookmakers before the Budget. The burden of their problem was that they did not see how this tax could be fairly collected without putting registered and licensed bookmakers in a difficult position compared with unofficial bookmakers, who might be prepared not only to flout the betting laws but also to dodge any tax that my right hon. Friend might seek to obtain from them. Clearly, it is more difficult to collect the tax than was originally proposed. My own feeling is that we should endeavour to devise a method of collecting tax from all forms of gambling. But it is essential that the tax should be easy to collect and if the tax law cannot be enforced there is no point in trying to introduce it.
In conclusion, let me refer to the regional unemployment problem. I think that everyone in the Committee is gravely disturbed about the level of unemployment in certain parts of the country and we are pleased to see that determined efforts are to be made to grapple with the problem by, for example, the clearance of sites. An amount of 85 per cent. to 95 per cent. is to be granted on tenders that are placed within the next nine months. I think that is an excellent way not only of dealing with decay in the centres of towns in some of the areas of the North-East but also of stimulating employment in those areas.
The aid to certain countries of the Commonwealth, in Ghana, India and Pakistan, for example, should give a fillip to the expansion of exports, particularly in the areas which are heavily hit. We have heard of the two ships being built in the North-East for Ghana. That is a step in the right direction.

After all, £2 million is involved and this, in my view, is the right way to deal with aid to Commonwealth countries. Let us link the aid to the import of particular heavy industrial commodities which we can produce so admirably and which, moreover, are produced in the areas where unemployment is high.
I hope that my right hon. Friend will consider tying loans of this sort to other types of expenditure. It is no use providing plant and machinery for countries such as Pakistan or India, or possibly East Africa, unless these countries are capable of handling it. I hope that fees for management consultants, consultant engineers and so on who are able to train people in these countries to use the capital goods imported from Britain will be covered under this system. It is so much more beneficial for the countries concerned if their own people can be trained by British management consultants or production engineers to develop their local skills and thus make the greatest use of capital equipment.
I think that I have said enough to indicate that I regard this as an excellent and workmanlike Budget which will enable us to grapple with the twin problems of exports and unemployment.

9.11 p.m.

Mr. John Rankin: The Chancellor of the Exchequer has received so much praise that I feel it may not be good for him. We can overpraise politicians, particularly Front Bench politicians, and, in his own interests, I wish to qualify some of the things which have been said about the right hon. Gentleman.
I can understand the reaction of the members of the Tory Party. Their reputation in the country at the moment is at its lowest. Their performance at elections has been disastrous. The deposits of Tory candidates have been endangered and even lost at recent by-elections, so that, naturally, when hon. Members opposite hear a Budget statement such as was made today in present political conditions, they spring from the depths of despair almost to the highest heights of optimism. I was reminded of the old saying:
The devil was sick, the devil a monk would be;
The devil was well, the devil a monk he'd be".


That is not untrue of a great deal of the contents of promising Budgets which have been announced from the party opposite during the last twelve years. I am sure all hon. Members recall the Budget of 1955. Perhaps it was not quite so good as this one. But, nevertheless, it was promising. In the spring of that year the Budget gifts were announced. In the autumn, when those Budget proposals had served their purpose, the gifts were taken back, even down to the allowances on pots and pans, by means of another Budget. I hope that the same thing will not happen in respect of this Budget which has been introduced at just about the same date as the 1955 Budget. It went through the House with remarkable rapidity. The Finance Bill was almost rushed and the General Election followed in the month of May. One wonders if we are to see a similar performance on this occasion.
I do not want to take up many of the points which have been made in this debate, but at least one was rather remarkable. It was made by an hon. Member opposite who said that one of the purposes of the Budget was to "get the country off the ground". I have never before heard an hon. Member opposite telling us so clearly that that is where the party opposite has brought Great Britain. As a result of twelve years of Tory rule we are right down on the ground.

Mr. Bence: On our knees.

Mr. Rankin: This Budget, which has inspired hon. Members opposite so much, is the instrument which is to lift us from the depth to which the Tory Party has reduced us. I have been thinking of a famous remark which Macbeth delivered as he walked that famous castle in Inverness on a notable occasion. I agree that this is an adaptation to bring it up to date. I do not know whether or not he was thinking of the Tories or whether there were Tories in those days, but "Their promises are void of substance." That has been true of many of the promises we have heard from this Government in the past.
The Chancellor said that his purpose today was to cover the whole economy. That is not my purpose tonight because at least two of my lion. Friends would like to get into the debate after I have finished. The Chancellor also declared

his theme as being expansion without inflation. I am certain he realised when he said it that, if he manages this, it will be a considerable achievement. In order to achieve what his Budget proposes, he places two demands on those who are to benefit. They have first to spend in order to create the demand at purchasing level which will start the machine moving more rapidly than it has done over the twelve years in which the party opposite has been in power. At the same time they must save to enable the Chancellor to borrow to pay for the benefits which are to come from the Budget. Those two aims are in some respects contradictory. It will be interesting to see how they work out during the year, assuming that the year is worked out under the present Government.
The Chancellor went on to say that it will also be the purpose of this Budget to increase our invisibles. With that aim, of course, I do not disagree, but it is remarkable because from 1952 up to 1961 our invisibles steadily declined from £443 million to £61 minion. During all those years the Tory Government produced only one Budget which had a current balance. But when invisible earnings were taken into consideration, they produced Budgets which had an overall balance. I take it that one of their big purposes is to arrest the decline in invisible earnings and then to build them up.
Having made those general observations, I want to deal with a matter which concerns not only my own division but also every shipbuilding area in Great Britain. I had hoped that we should hear a little more about shipbuilding in view of the fact that the Chancellor emphasised the need for exports. He referred to the two ships from Ghana, but I think that he might have indicated his own attitude a little more dearly on shipbuilding. I accept that he is to take some expert into consultation before he reaches a decision, but in shipbuilding we have waited a long time to see an increase in the numbers employed and in the output of ships. It is a pity,
I feel, that this matter should be referred to consultation with an expert—of whom I know nothing.
I was arrested by a passage in yesterday's Glasgow Herald which referred to the fact that the launching output for the first quarter of the year is the lowest in Scotland since the war. The


Clyde yards have launched only nine ships of 42,000 tons and the east of Scotland yards have launched three ships of about 2,300 tons. Last year at this time the combined output was 91,500 tons. This is only one year in twelve years of decline, and within that one year there has been a distressing slump in production. As a consequence, six Clyde shipyards or ships engine works have either become casualties of the present recession in the industry or have merged with other firms. For example, this week—I think on Monday—we saw the launching of the last ship under the flag of William Hamilton and Co., at Port Glasgow; shipbuilders for over seventy years on Clydeside.
Much the same is going on all over the shipbuilding areas of the country. On Clydeside closures are taking place, as well as streamlining, integration, rationalisation or whatever hon. Members call it, together with modernisation in production which keeps this country in line with the best shipyards in the world. Despite these changes there has been a decline, arid unemployment remains. Mr. James Lenaghan, the managing director of Fairfield Shipbuilding Company in my division, points out in the Steel Review that the British merchant fleet of over 5,000 ships, totalling 21,500,000 tons, includes 1,280 ships of 2,380,000 tons which are 20 years old or more. He goes on to make this proposal:
This seems to be an opportune time seriously to consider a national scrap and build policy and the replacement of older types of naval ships.
Then he makes this other interesting suggestion, to which I hope that the Financial Secretary will pay very serious attention:
Shipowners too should be discouraged in their own interests from selling their old ships abroad for continued trading,
because that is detrimental to the best interests of shipping and shipbuilding in Great Britain. These are the words of a very distinguished shipbuilder, one who has risen from the bench to the top level in the industry.
I welcome what he says, because when I suggested a policy of scrap and build five years ago it received a somewhat cool welcome. Nowadays it appears to be widely accepted as a policy which, if

applied, would revive an industry which badly needs to be stimulated and encouraged. It should be remembered that the building of passenger ships is not merely a case of building ships. Shipbuilding means stimulation to the furniture and furnishing industry. It means equipment of all kinds for bedrooms, dining rooms, recreation rooms, and so on, all on a large scale.
I quote from the leading article in The Times of 3rd January of this year:
The shipbuilding order book has shrunk since the boom years from £7 million to £2 million and the labour force has shrunk from 125,000 to about 85,000.
The Times goes on to say:
The short-term outlook for the yards is grim.
I hope that the Financial Secretary will impress this on his right hon. Friend. Indeed, in Scotland it has been found necessary to continue industrial derating for shipbuilding yards, and indeed, for all industry, until 1966.
Nobody quarrels with the main reason which has been given for the decline in shipbuilding. It is accepted. We recognise the problem which has been created by surplus world capacity, but that is not a reason for inaction on the part of the Government. Much of the expansion abroad has been due to subsidies and the other forms of State aid given to shipbuilding in countries which never before had a shipbuilding industry; not that we grudge them that. They are entitled to have a shipbuilding industry. I suppose it is the whole process of capitalism, the system in which right hon. and hon. Members opposite believe, that our consumers are continually turning into competitors. As Tory hon. Members believe in that system, it is they who should provide the remedy.
A notable but unfortunate development for Britain in the last two or three months has been the disappearance from the order books, for the first time in many years, of orders for passenger liners. The commissioning of the "Northern Star" last summer left our shipbuilding industry without a single contract for a major passenger liner. As we know, the contract which preceded that, for the Norske Amerika liner, was snatched from us because the French Government intervened at the last moment and gave £500,000 in aid to the French industry. Because of that we lost an order worth £7 million.
We are told that the shipbuilding industry is dependent on British shipowners for 80 per cent. of its ouptut. We should note, however, that the industry is well equipped to undertake export work. One wonders, in this connection, what help the industry has been receiving from British Government sources abroad in seeking these orders. If time permitted I would like to have developed another aspect of this problem of trade with other countries. I would have gone into the question of the amount of assistance given by the Government to other industry in its endeavour to conduct business overseas, since this sort of help is not very evident. The fact that the Government have not formulated any definite policy for the shipbuilding industry is a serious condemnation of their apathetic attitude.
If the Government do not have a policy for the industry, one has been put before them now. The industry is declining each year, despite its own efforts, and the idea of scrapping ships over a certain age and replacing them by modern, up-to-date liners has been suggested. If the Government are in an economically expansive mood they should provide the money to carry out a policy to expand the British shipbuilding industry. If they did this it would help our export drive, and, in the long run, I believe that the success of the Budget will depend on the success of our export drive.

Mr. Loughlin: While appreciating that my hon. Friend is entitled to speak for as long as he likes, has he forgotten the comment he made at the beginning of his remarks when he said that be intended to be generous to his hon. Friends and make a short speech?

Mr. Rankin: My hon. Friend has chosen to lengthen it—

Mr. Loughlin: No, no.

Mr. Rankin: Those who want to be helped must first help themselves, and the most helpful contribution my hon. Friend could have made to my speech would have been to remain in his place and let me finish, as I propose to do.
I was saying to the Economic Secretary that we must sell more, and we must get into markets that so far have been ignored. The hon. Gentleman

knows the markets to which I refer. We must rule out political pressures in the export trade—and such political pressures have been put upon us. And the sooner the Government get down to providing a clearly-formulated policy for shipbuilding, the better it will be for Great Britain.

9.36 p.m.

Mrs. Eveline Hill: It would be remiss of me not to congratulate my right hon. Friend the Chancellor on his very businesslike Budget, presented in what I thought to be a very businesslike and straightforward way. It was clear that he had given an enormous amount of thought to helping as many people as he possibly could. Not even those of us who live in areas where unemployment figures are not so high could quarrel at all with the steps he has taken, or is taking, to help areas of high unemployment. It is right that it should be so, for the very simple reason that we live by industry and, if industry is not in good shape, none of the other benefits we would like, none of the other benefits of the Welfare State, are possible.
I know that many of my constituents will be delighted that Schedule A has been abolished. I have received many complaints from them about it—they have all felt it to be an iniquitous imposition. Its abolition will please many people. I am glad, too, that allowances have been raised, as a result of which many people with children, and even with quite high incomes, will perhaps pay no tax at all, or very little. These are things that will help many people who are not receiving any other tax benefit.
One thing that occurs to me is that this is not what one might call a housewife's Budget. There is no mention in it of the housewife, as such, but I hope that husbands will pass on some part of these helpful additional allowances so that the housewife, too, may participate in what is being meted out.
If I have one very great regret it is that the fuel oil tax has not been done away with, or reduced. That would indeed help the housewife, and I am quite certain that my own local authority, running its big transport department, will be very disappointed that my right hon. Friend has not been able to do something about this tax. Perhaps, however, all is


not lost, and that we may in a fairly short time be able to look for help in this direction.
It is usual for people when everything is not just going to their liking to say that "they" should do something. If "they" happen to be the Government, they are doing something with this Budget. The Government can but try to make the climate right for everything to progress; after that it is up to all of us—hon. Members, managements, workers, trade unionists, everyone down to the office boy—to play our part. If we all pull our weight with the measures presented today, I do not think that we can fail to progress. I do not think that I need answer the scorn of some hon. Members opposite for the Chancellor's motives, because I do not think that with this Budget there need be a General Election.

9.40 p.m.

Mr. Cyril Bence: I agree with much of what the hon. Lady the Member for Manchester, Wythenshawe (Mrs. Hill) said about everything being dependent upon the cooperation of all sections of society. We on this side of the Committee have been saying this for many years, and I am sure that many hon. Members opposite expect co-operation from all members of society, whatever party is in power. It is the duty of everyone to co-operate as far as is reasonable in decisions made by the Government. If people do not like those decisions, they must try to get rid of the Government by voting for the party of their choice at the next election.
I was disappointed with the Budget speech. It was good to hear the Chancellor say that he was concerned not only with the planning of the economy and the redistribution of industry, which are both desirable objects, but also to give taxation relief with justice to all sections of the community. It has always been the proud boast of my party that we use the taxation system to redress discrepancies in the purchasing power of the people, but today 7 million taxpayers get no relief at all from the Budget. They are the people on the lowest incomes. It is true that they pay no Income Tax, but every time they go shopping they pay tax. These are the sick, the maimed, the unemployed, the low-income groups, the labouring classes, the 7 million to 8 million good honest working people who pay

no Income Tax. Many of them have large families. It is true that those receive family allowances, but they pay tax on everything they buy with the exception of children's clothing.

Mr. Geoffrey Wilson: Did not my right hon. Friend the Chancellor of the Exchequer point out that a section of this class have received recent relief by reason of increases in pensions and National Assistance?

Mr. Bence: Let us get this perfectly clear. The increases given in the last review were justified by the Minister of Pensions as bringing pensions to the same relationship that had existed earlier, in the last two or three years. The increases did not improve the relative position of the average income level and the pensions. They were simple increases, because these figures had slipped behind. Surely that argument cannot be used twice over.

Mr. Barber: If the hon. Member will look it up, he will find that the last increase was an increase greater than the increase in average industrial earnings, and greater than the increase in the cost of living.

Mr. Charles A. Howell: And paid for by contributions.

Mr. Bence: The Financial Secretary says that these increases were greater than the increase in average net incomes during the same period. This may be true in certain cases, but I do not think that it is true throughout, because the 2 million to 3 million people who are on National Assistance have their award from the Board reduced by the amount of the increase so that on average their income, I believe, is only 2s. higher than it was before. If the increase results in an overall improvement, this is not true for the 2 million people for whom National Assistance has been reduced. There are several sets of figures. In one case what the hon. Gentleman suggests is true, but it may not be true in others.
But let us not forget indirect taxation. We often hear loose talk about there being millions of people who pay no taxes. It is just not true. They may not pay Income Tax, but they pay indirect taxes.
I was surprised to hear the Chancellor say that this is an expansionist Budget and then go on to explain some of the things he may have to do as a result of it. One thing he told us—I do not quarrel with it, but I think that it should be on record because there is nothing in the evening papers about it—was that he has taken the necessary measures to arrange through the International Monetary Fund and the central banks so that, if we get into trouble with the £ as a result of expansion, we shall be able to borrow all over the world to support the £. Furthermore, if he finds that the £400 million being given away is too much, he will set up an inquiry into the impact of a turnover tax. This, I presume, will be with a view to clawing back the money, as has been done before. That is what it looks like to me. The ground is being prepared by the right hon. Gentleman in case he has made a mistake. If the Government are successful at the next election, there will be the inquiry under Mr. Gordon Richardson into the system of a turnover tax so that they can get the money back.
We are to have an inquiry into a possible tax on gambling. I am very worried about this. When the Postmaster-General introduced his proposals a few days ago, I thought it shocking that the economy of the Post Office could suddenly be upset and almost completely shattered by two months of cold weather and the suspension of football. If everyone becomes conscious of the dangers of smoking and the temperance movement is more successful in its campaign against alcoholic drink so that everyone stops smoking and drinking, the Chancellor will be in such a precarious position that there will only be suicide, resignation or emigration for him. I really do not know what has happened to our country's finances. When I hear talk of a gambling tax and think of what happened after a bit of cold weather and its terrible consequences for the Post Office, I am very alarmed about the state of our economy.
Here is something else not mentioned in any of the evening papers today. The National Debt has increased during the past 12 months at the rate of £3 million a day. It has gone up by £1,182 million. This is a staggering thought. It is now £29,856 million. We cannot do all kinds of things for the sick, the injured and

people with the lowest incomes, yet we have a National Debt like that. It is quite beyond me. We shall have to have a new set of arithmetical symbols because the figures are becoming so astronomical. When I was a boy, I little dreamt that I should live to see the day when the National Debt would be £29,856 million. One cannot imagine such a sum of money. How much is it? The situation is fantastic, and I wonder where it is to end. The Chancellor says that he has had a successful year. He is able to give away £400 million. Yet in the past year the National Debt has increased by £1,182 million. This seems to me to be peculiar economics or I must be very old-fashioned. It is disgraceful for the Chancellor of the Exchequer to talk about a very successful year in these circumstances.

Mr. Barber: The figure is £269 million, not £400 million.

Mr. Bence: That is right. I am sorry. The figure is £269 million in taxation relief. However, as one of my hon. Friends says, what is a couple of hundred million in a National Debt of £29,856 million? This could have made a nice gift for the unemployed of the country.
I conclude by supporting what my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) said about shipbuilding. I am surprised that there is nothing in the Budget to give any encouragement to the shipbuilding industry or to merchant shipping. If any industry in this country has suffered from all sorts of international injustices, it is the British shipbuilding and merchant shipping industry. If ever an industry deserves something from its Government and its people it is the British Mercantile Marine and shipbuilding. There are very few shipyards in Britain which are below the standards of shipyards abroad.
British seamanship and British ships are as good as ever they were, yet the shipping industry suffers from the prestige nationalism of other countries which must have their own yards and build their own ships. This' is a status symbol, like the Rolls-Royce of the board of directors. The same thing applies to aircraft. The jet aircraft has become a status symbol. Unless a country has its air service, shipbuilding yards and merchant vessels it is non-U.


The British shipbuilding industry has suffered badly from this state of affairs. It has to face the competition of subsidised airlines and subsidised research.

Mr. Peter Walker: I am following the hon. Gentleman's argument with interest, but I hope that he has noticed that my right hon. Friend the Chancellor of the Exchequer has taken advantage of the feeling in other countries by saying that loans would be made available to, for example, Ghana, to purchase ships in this country, thus assisting the shibuilding industry.

Mr. Bence: That is right, and it is very desirable. It is in keeping with the campaign of my hon. Friend the Member for West Lothian (Mr. Dalyell). Since he was returned to the House of Commons, he has waged an intensive campaign by putting Questions to the Prime Minister and others to link the scheduled areas with the development areas. His intensive work seems to have borne fruit. We should be very grateful to my hon. Friend, because he has fought a lone, long and strong battle. I am sure that the hon. Member for Worcester (Mr. Walker) realises what a grand job my hon. Friend has done in the short time he has been a Member of Parliament. This shows how desirable it is to have young, energetic men with creative ideas like my hon. Friend in the House of Commons. I am glad that the hon. Gentleman has mentioned that point because the Clyde could benefit from my hon. Friend's initiative.
I am very disappointed that certain industries in Scotland have not received some Purchase Tax relief in order to encourage them and to help young married couples. I refer to industries like the furniture industry and the floor covering industry. A linoleum factory in Kirkcaldy is to close and will not make any more linoleum. The furniture industry in Dundee is in a very sorry plight.
In my constituency there is a sewing machine industry, and it would have been greatly helped if Purchase Tax could have been removed from sewing machines. This would have helped not only the high income groups, although I do not suppose that people with £10,000 a year would bother to buy sewing machines, and I suppose that the

Purchase Tax on furniture would not mean anything to them either. But this sort of thing means a great deal to people on low incomes. A sewing machine is a great asset to a young married couple on a low income scale. Also, Purchase Tax removal would have been very desirable.

Mr. Loughlin: Is my hon. Friend aware that the furniture trade at the moment is in a very parlous state? There is serious concern whether there is not likely to be a rapid deterioration in its employment situation.

Mr. Bence: I am grateful to my hon. Friend, and I am sure the Committee is, for bringing into the discussion such a fact about the furniture trade. I believe that the same thing is true in English constituencies. There is a winding down of the industry through sales difficulties. In Scotland the effect has been very bad.
In the small burgh of Milngavie in my constituency soft drinks are manufactured. The Parliamentary Secretary to the Ministry of Labour knows the place very well. These are first-class soft drinks, far better than the hard drinks sold around the country, but there is a tax on them, which is very bad. In such a small place such an industry provides very pleasant employment for 60 or 70 or perhaps 100 persons in a small factory. Much of the labour is female, and it is useful employment, with good wages and good conditions, near the homes of the workers. It is very desirable and healthy employment. It is a pity that such an industry should be affected by the imposition of Purchase Tax.
The Chancellor had here a glorious opportunity in that he felt that he could safely reduce taxation. It is unfortunate that he could not have made some gesture to the seven or eight million families whose income is so low that they pay no Income Tax. It was highly desirable that he should have given some relief from Purchase Tax.
I congratulate the Chancellor on at last coming to the conclusion that we must have different fiscal policies for different parts of the country. I always thought it was nonsense to have a fixed investment charge for all parts of the country while one area might be prosperous and another depressed. We in


Scotland are delighted that the Chancellor has introduced a new fiscal policy which vie have advocated for ten years. The Chancellor has seen that we were right in our approach.
The only thing I am sorry about is the danger that if the Conservative Party gets back to power it may use the turnover tax investigation to claw all this back, bringing in a little deflation because of the new stimulating pressure in the Midlands and the South. As a result of that pressure, it may apply a universal tax on the country again to draw back the purchasing power, which will affect Scotland in common with other parts. We shall then start to slide back again. I am worried that the people, after the experience of the last ten years, accepting the Budget as an expansion Budget, will feel secure that expansion will continue, and will not return to power the party which will be determined to maintain the impetus of the expansion and not use the turnover tax or gambling tax to claw it all back again.

Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Peel]—put and agreed to.

Report of Resolutions to be received Tomorrow.

Committee also report Progress; to sit again Tomorrow.

EMPLOYMENT, BOOTLE (LITTLEWOODS POOLS LTD.)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peel.]

10.0 p.m.

Mr. Simon Mahon: I am very happy to be able to set the statement which I wish to make this evening against the background of what I think was the very important statement made by the right hon. Gentleman the Chancellor of the Exchequer today. During his able and eloquent speech, in which many useful measures were introduced, he said that it would be proper to provide for redundancy in society and it was necessary to do this for sound economic growth. I think that is pretty well what he said. I set my statement this evening against that of the Chancellor and I also set it against the Contracts of Employment Bill which was introduced in December, 1962,

and presented by the Minister of Labour supported by the right hon. Gentleman the Prime Minister and many other right hon. Gentlemen. That Bill is to
Require a minimum period of notice to terminate the employment of those who have been employed for a qualifying period, to provide for matters connected with the giving of the notice, and to require employers to give written particulars of terms of employment.
There is a firm in my constituency called Littlewoods Pools. I think I should say that the directors are Mr. Cecil Moores, Mr. Nigel Moores, Mr. L. Brierley Jones, and the executive director, Mr. A. A. George. I say that so that we shall not be mixing that firm up with Littlewoods Mail Order Stores.
These people are big employers on Merseyside. On 5th March this year at 4.40 in the afternoon a notice over a broadcast system was given out to 1,000 people. Out of the 1,000 people 850 were dismissed by the end of the notice. This was a most peremptory action, and I want to say as little about that as possible because I am rather embittered by it but I want to discuss the method of dismissal, the effect of the dismissal, and the future prospects of employment of those people who were dismissed in such a manner.
I described this, when I heard about it in the first instance as being archaic, ruthless and impersonal. I have had no reason to change my mind in the slightest degree. I feel that my description was not an over-statement in any shape or form. What I asked myself was, was this decision by this firm to sack 850 people in such an impersonal way a move of desperation? Was it made in desperation? Was it calculated? If it was a move made in desperation it was rather stupid, and if it was calculated, it was rather heinous.
What happened on this day? One would have thought that the first people who would have been notified would have been the Ministry of Labour. The Parliamentary Secretary knows my constituency very well indeed. He also knows that on the afternoon in question his manager at the local employment exchange was not told that 850 people were about to be dismissed. The Only people who were alerted were the police and the special investigation branch of Littlewoods organisation. Members of this branch were brought in from other


Littlewoods works and hidden inside the building in question until 4.40 p.m., until the split second when the announcement was made that these people were to be dismissed, and then they swooped on the girls—this is no exaggeration—who barely had time to get their coats on, and ushered them out of the building.
The statement issued by the firm said that those who had been employed for more than 20 years would be kept on in the firm's employment. Those who had been there for up to 20 years would be reimbursed on the following scale: those with one year's continuous service would get one week's pay; those with two years' service would receive two weeks' pay; those with three to five years' service would receive three weeks' pay; those with six to nine years' service would receive four weeks' pay; and those with 10 to 19 years 11 months and 29 days' service would be rewarded for such loyal service with five weeks' pay.
There was a complete lack of discrimination. People who had been there for 19 years and 11 months were sacked with the same lack of consideration as those who had been there for 10 months. This firm has seven other buildings on Merseyside, and I pointed out to the firm that it ought to have adopted a fairer policy. I said that what Mr. Moores had said in reply to my complaint was
 … no answer to the indiscriminate dismissal of 800 people in Bootle. Obviously if Mr. Moores and his firm found themselves in trouble of any kind which necessitated reduction of personnel, surely that could have been spread over the whole of Merseyside and other parts of the country and not been kept to one building in Bootle where we have the heaviest unemployment in the area.
The people employed at this place were widows, people whose husbands were sick, people who were married to war pensioners, and others in similar circumstances, but they were all dismissed with the same lack of consideration and given this most inadequate compensation. Is Littlewoods the only firm which found itself in trouble? What did the other pools firms do? They spread the load more evenly. If they had to dismiss people, they did so in a far more humane, just, and generous way.

Mr. Speaker: Order. I am listening to the hon. Member with great interest, but I do not for the moment follow where

the Ministerial responsibility is alleged to exist here. Perhaps the hon. Gentleman would be good enough to bear that in mind.

Mr. Mahon: I thank you for your indulgence, Mr. Speaker, but I am trying to get to the point. This action by the firm more than doubled the already high unemployment figure in the Merseyside area. I have already referred to the Contracts of Employment Bill which seeks to bring in minimum standards of notice to be given to people who become redundant. Not one minute's notice, or even one second's notice, was given to these girls before they were sacked. I am grateful to you, Mr. Speaker, for allowing me to make that point.
On the day this dismissal occurred we had 3,041 men, 158 boys, 584 women and 106 girls unemployed in Bootle, bringing the total of unemployed persons to 3,889. That is the alarming fact. In those circumstances I ask the Minister what possibility there is of bringing into my constituency work which can take the place of the great loss that has been suffered. The number of vacancies on the register is very small, and our unemployment figure is growing all the time.
Much hardship has been caused by these dismissals and others. In some homes four or five people were sacked at one time. There is no need for me to embellish the point. Bootle Corporation is trying to bring in as many jobs as possible, but the peremptory action taken by Littlewoods nullifies all that the Corporation and the Government are trying to do. Much money has been spent by the Corporation in trying to create work, and the Minister has given us a great deal of help. I am also grateful for the concessions made in the Budget this afternoon. They should prove very helpful to our development district, especially the allowances, and the more attractive provisions that have been made to persuade industrialists to come to our part of the world—an area which, at the moment, is not the most attractive from the point of view of living standards.
I do not wish to moralise about the dismissal of these people, but the question of gambling has been discussed today, and if the Minister is considering what sort of industries could be directed into our area I hope that he will accept that


we would rather not have any of the more ephemeral industries of the sort that we have had to rely upon in the past. We find that industries such as Littlewoods are like candyfloss. They are sordid, and their managements tend to be feudal. We would rather see these great premises used for more responsible and dignified purposes.
What has happened in Littlewoods is having a great effect upon Ministerial responsibility for maintaining peace in industry. The Minister knows that the question of casualisation in the docks is occupying much of his time. Many of the sacked girls are the daughters of dockers and ship-workers. The question of industrial relations extends over a wide field, and happenings of the kind to which I have referred can have a great effect all over Merseyside.
You have been very kind in allowing me a wide margin of latitude, Mr. Speaker, and I do not wish to say much more about this affair, which distresses me very much. I merely express the hope that the Minister, and the other Ministers responsible for these matters, will bear in mind that Bootle cannot provide work for its children. Bootle has 84,000 people, 21,000 of whom are under 15 years of age. That is why these sudden dismissals are so bad. The Ministry was given no prior notice, and it cannot possibly have planned to avoid increased unemployment. Firms like Littlewoods give themselves a social and industrial absolution. How can we hope to create a properly planned economy, with the Government, the trade unions and the workers working together, if some people give themselves this absolution? This matter has caused a great deal of trouble in my town.
I should like to quote from a letter that I have received from a lady who was employed in this firm. I am sure that the Minister will find it of interest. This girl had to write anonymously. She says:
The reason being that I am employed by Littlewoods and the employment situation being as it is on Merseyside, I cannot afford the luxury of principles.
That is the situation we get. This is an old phrase. We heard it said 30 years ago.
I was pleased to hear the Chancellor say that he had to take social and other considerations into account before he could make a decision on gambling. We are tired of relying on this sort of industry for our living. We are hard-working people on Merseyside. We are appealing to the Government to give us more work to do, and to let us develop some of the land that we own outside our area. We do not like our people being put into the undignified position that they have been put into by Mr. Cecil Moores and his colleagues in this sordid gambling empire.
I hope that efforts will be made to get a better type of work for our people to do. It would be better for our town, it would be better for our people, and it would be more rewarding to the country. It would satisfy the conscience of many people who are worried about the growth of gambling empires on Merseyside. It is becoming a major headache. We have chemin de fer, roulette, betting shops, and pools. We want less of them and a greater development of our natural industries. I appeal to the Minister to do all that he can to help us to reduce unemployment.

10.17 p.m.

Sir Stephen McAdden: I hope that the hon. Member for Bootle (Mr. Mahon), with whom I have a very good personal relationship, will forgive me when I say that I think that he has overstated his case. It is rather late in the day to talk about the sordid, ephemeral business of gambling on Merseyside when for years Merseyside has been very grateful that thousands of people have been employed by Littlewoods, Vernons and others. Their jobs have not been poorly paid. No one would suggest that they were not good employers of labour.
It may well be that in this instance he is able to argue a point with which, presumably, the Parliamentary Secretary will deal, but to suggest that this is a matter that ought to be brought to the attention of the House as something that Merseyside does not want is flying in the face of the history of what has gone on there. So far as I know, the hon. Member for Bootle has never previously made a complaint about the people of Bootle or the people of Liverpool being employed in a particular industry which he does not like.

Mr. Mahon: Will the hon. Member say something about the actual dismissal at a moment's notice of these people and justify that?

Sir S. McAdden: It is not my job to justify anybody about anything. All that I am attempting to do is to draw the hon. Gentleman's attention to the fact that this is not something which sprang up overnight. People have been employed in Bootle and in Liverpool in this form of business for years without any protest whatever from the hon. Gentleman. It is not my purpose to comment on the facts of the case. The hon. Gentleman has made his case and I have no doubt that the Parliamentary Secretary will make his. Let us not exaggerate things. Do not let us get emotional, and talk about gambling being an ephemeral or sordid business. It happens that this form of gambling is subject to a 33 per cent. tax.

Mr. Malcolm MacMillan: That does not make it into a virtue.

Sir S. McAdden: I do not say that it does. But it is subject to that form of taxation. If this firm finds itself in difficulties, presumably it has to take some step to extricate itself.
I promised to speak for only two minutes. I like to keep my promises. All I wished to do was to rebuke the hon. Member for Bootle for having taken his case so far. I hope that that will not impair what has always been a friendly relationship between us. But I think that the hon. Gentleman overstated his case.

Mr. Mahon: I cannot understand the hon. Gentleman's interest.

10.21 p.m.

The Parliamentary Secretary to the Ministry of Labour (Mr. William Whitelaw): I wish to say straight away that I fully appreciate the reason why the hon. Member for Bootle (Mr. Mahon) chose to raise this subject. We all realise the personal problems which redundancy of any sort is likely to create for those affected, and I certainly share the hon. Gentleman's concern—as I know does my hon. Friend the Member for Southend, East (Sir S. McAdden)—that everything possible should be done to reduce the redundancy to a minimum.
Before dealing with some of the points made by the hon. Member, I think it right that I should set out the essential facts. I understand that on 5th March the employees at the Bootle branch of Littlewoods at Irlam Road were informed over the Tannoy system that the branch would close on that day. This branch, which is one of five in the Merseyside area, had a total of 1,041 employees, of whom all but 83 were females. The firm offered alternative work at other branches to the 83 males and 128 female staff with over 20 years' service. The remainder were discharged.
The hon. Member for Bootle has stressed that it was particularly unfortunate that this redundancy occurred at a time when unemployment on Merseyside was at a high level. I fully accept the seriousness of the present situation which is indicated by the figures. In March of this year 2,632 people were registered as unemployed at the Bootle employment exchange and of these 829 were females, compared with a figure of 1,689, of whom 433 were females, in March of last year. I have no wish to play down the importance of these figures or the seriousness of the unemployment situation on Merseyside as a whole. But even in these circumstances no one should criticise the firm for closing a branch if, in its commercial judgment, it considered that necessary. This must be a matter within the discretion of the firm. At the Ministry of Labour we have to accept the position and then do everything we can to find work for those made redundant.
I wish now to consider this aspect of the problem. Since the closure of the branch 574 of the 850 women declared redundant registered at employment exchanges on Merseyside, the greater proportion of them at Bootle. Undoubtedly some of the remainder have found work on their own. Others have not registered, perhaps because of illness or for some other reason. Of the 574 who registered 66 have been found work by our local officers and 39 have found their own employment, making a total of 105 now back at work, but leaving, alas, 469 still registered as unemployed.
I do not want to mislead the House, or the hon. Member for Bootle about the prospect of finding alternative work for these people. The figures of unemployed which I gave earlier make clear that the


prospect of finding work is not good. This is particularly true of clerical workers, and I understand that most of the women declared redundant by Little-woods have special clerical skills which would not be of great value to other employers in the area. I can assure the hon. Member for Bootle that our officers at Bootie and elsewhere on Merseyside are doing everything in their power to find work for these people, and will continue to do so—

Mr. Mahon: Mr. Mahon rose—

Mr. Whitelaw: I am sorry, but I must get on. I cannot give way to the hon. Gentleman.
Littlewoods have themselves told us that those made redundant will have priority for vacancies in the firm's mail order business.
The hon. Member rightly drew attention to the need for more jobs in the Merseyside area. I quite accept that. Merseyside is a development district and so can qualify for aid under the Local Employment Act. There is undoubtedly a need for further industrial expansion on Merseyside as a whole. As the Chancellor of the Exchequer indicated this afternoon, the Government are anxious to see such expansion take place. I am grateful to the hon. Member for the generous manner in which he acknowledged the value of my right hon. Friend's measures.
Perhaps I may be allowed to touch briefly on the particular remarks made by the hon. Member about industrial expansion in the Bootle area. First there is the future of the premises in Irlam Road. He raised that question when he came to see the Parliamentary Secretary to the Board of Trade and me. My hon. Friend undertook to see whether there was anything the Board of Trade could do to help. It has offered its services to the firm should it wish for assistance in finding an industrial tenant, but, as I think the hon. Member knows, the firm is unable to say at this stage what it wishes to do with the premises. I assure him, however, that the Board of Trade will keep a careful watch on the situation and will be very willing to offer any assistance it can.
The hon. Member also mentioned the anxiety in Bootle that it should be pos-

sible to find room locally for some industrial expansion and so create more jobs. He knows that his suggestion would involve some alterations to the proposals made by Lancashire County Council for the Merseyside green belt. These proposals are being considered by my right hon. Friend the Minister of Housing and Local Government in the light of the regional studies which are being made of Merseyside's land needs. I can do no more this evening than undertake to see that the hon. Member's remarks are brought to the notice of my right hon. Friend the Minister.
The hon. Member also criticised the way in which the firm handled this redundancy. When he came to see me last month, I undertook to arrange a meeting between the firm's representatives and one of our Ministry's industrial relations officers. The firm agreed to this and a meeting took place almost at once on 13th March. We have had the benefit of a full report from the official concerned which has been most helpful to me in preparing my remarks for this debate. I understand that the first intimation given to the workers was an announcement over the loudspeaker system on the afternoon of the day on which the whole branch closed down. The local employment exchange was given no more notice of redundancy than were the workers. Apparently it has always been the practice of all branches of this firm that workers to be dismissed are discharged, given payment in lieu of notice and never retained to work out their notice on the job.
I understand that the firm adopted this policy because of the nature of the work in which great accuracy and integrity is required from the employees. The firm takes the view that in those circumstances there would be a risk if it engaged in prior consultations about redundancy or gave advance notification to the workers concerned or to the local office of the Ministry of Labour. For similar reasons it did not feel able to continue to employ workers under notice. It may be that there are special considerations because of the nature of operations at Littlewoods. Even so, I am bound to say that the announcement of redundancies over the loudspeaker system seems to have been unfortunate. Surely it would have been better to


give the staff an explanation face to face or to convey the information in a personal communication to this effect.
It also seems a pity that the actual redundancy terms were not better understood by the employees. Misunderstandings could have been avoided if the firm's redundancy terms had been made known in advance to the workers, or at least conveyed to them in writing rather than announced to a stunned audience over a loudspeaker. This is all the more important because in fact reasonable payments were being given. I feel sure that if these details had been fully appreciated in advance, there would have been less feeling of shock and distress at the time of the announcement.
The hon. Member and others have suggested that the firm could well have spread the redundancies over several of its branches in the area instead of closing down one complete branch and

thus cause less hardship. I understand that the firm takes the view that it redundancy were spread it would have been compelled to have discharged even more staff to achieve the necessary safeguard.
I think it only right to point out that this case raises a general point of some importance. It emphasises the value of the Contracts of Employment Bill introduced by my right hon. Friend. I entirely acknowledge the hon. Member's tribute to its importance. It emphasises the urgency and importance of improving our arrangements for handling redundancy generally. This, of course, is the Government's—

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.